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/ Document 
1 No. 301 


SCAl RELATIONS BETWEEN THE UNITED STATES 
AND THE DISTRICT OF COLUMBIA 


REPORT 

OF THE 

JOINT SELECT COMMITTEE OF THE CONGRESS 
OF THE UNITED STATES 

PURSUANT TO 

PUBLIC ACT 256, SIXTY-SEVENTH CONGRESS, 
DIRECTING A SELECT COMMITTEE TO PREPARE 
AND SUBMIT TO CONGRESS A STATEMENT OF 
ALL MATTERS PERTAINING TO THE FISCAL 
RELATIONS BETWEEN THE DISTRICT OF COLUM¬ 
BIA AND THE UNITED STATES SINCE JULY 1,1874, 

AND THE BUMS THAT HAVE BEEN EXPENDED, 
TOGETHER WITH THE HEARINGS HELD 
BEFORE THE SELECT COMMIT¬ 
TEE THEREON 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1923 














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SENATE 


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Document 
No. 301 



FISCAL RELATIONS BETWEEN THE UNITED STATES 



AND THE DISTRICT OF COLUMBIA 


• REPORT 


OF THE 


JOINT SELECT COMMITTEE OF THE CONGRESS 
OF THE UNITED STATES 


PURSUANT TO 


PUBLIC ACT 256, SIXTY-SEVENTH CONGRESS, 
DIRECTING A SELECT COMMITTEE TO PREPARE 
AND SUBMIT TO CONGRESS A STATEMENT OF 
ALL MATTERS PERTAINING TO THE FISCAL 
RELATIONS BETWEEN THE DISTRICT OF COLUM¬ 
BIA AND THE UNITED STATES SINCE JULY 1,1874, 
AND THE SUMS THAT HAVE BEEN EXPENDED, 
TOGETHER WITH THE HEARINGS HELD 
BEFORE THE SELECT COMMIT¬ 
TEE THEREON 



WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1923 






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JOINT SELECT COMMITTEE TO INVESTIGATE THE FISCAL RELATIONS 
BETWEEN THE UNITED STATES AND THE DISTRICT OF COLUMBIA. 

SENATORS. REPRESENTATIVES. 

LAWRENCE C. PHIPPS, Colorado, Chairman. ROBERT E. EVANS, Nebraska. 

L. HEISLER BALL, Delaware. GUY U. HARDY, Colorado. 

WILLIAM J. HARRIS, Georgia. WILLIAM C. WRIGHT, Georgia. 

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SUBMITTED BY MB. PHIPPS. 

In the Senate of the United States, 

February <5, 1923. 

Orderedy That the report of the joint select committee appointed 
under the act approved June 29, 1922, to investigate the fiscal rela¬ 
tions as between the Federal Government and the District of 
Columbia since July 1, 1874, together with the hearings before the 
select committee, be printed as a Senate Document and that 1,500 
additional copies be prmted for the use of the Senate document room. 

Attest: 

George A. Sanderson, Secretary. 

Ill 

















CONTENTS. 


Page. 

Report of the committee, Part 1. 1 

Report of the committee, Part II. 21 

Preliminary report of Haskins & Sells, November 20, 1922. 25 

Report of Haskins & Sells, January 11, 1923. 31 

Synopsis of report of Haskins & Sells, January 17, 1923. 87 

Supplemental report of Haskins & Sells, January 23, 1923.. 88 

Report of Daniel J. Donovan, District auditor, January 17, 1923. 91 

Report of Elarl Taggart, General Accounting Office, January 17, 1923. 121 

Letters and report of Herman J. Galloway, special assistant to the Attorney 
General; 

Letter of July 18, 1922. 127 

Report of January 18, 1923. 128 

Letter of January 25, 1923. 133 

Letter of January 31, 1923. 135 

Brief of Citizens’ Joint Committee, including report of Alonzo Tweedale, Janu¬ 
ary 18, 1923. 138 

Report of Thomas A. Hodgson. 158 

Hearings before the committee; 

Statements of— 

B. F. Hill. 175,190,279 

C. C. Croggon. 183 

Daniel J. Donovan. 183,224 

Herman J. Galloway. 184,196 

Hon. Ben Johnson. 199 

W. W. Spalding. 243 

Edward F. Colladay. 245, 263 

Hon. Louis C. Cramton. 251 

Thomas A. Hodgson. 264 

Senator Wesley L. Jones. 272 

Senator Carter Glass. 276 


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REPORT OF 

JOINT SELECT COMMITTEE APPOINTED PURSUANT TO 
THE ACT OF CONGRESS APPROVED JUNE 29, 1922, 

TO DETERMINE THE FISCAL RELATIONS 
BETWEEN THE UNITED STATES AND 
THE DISTRICT OF COLUMBIA 


VII 







FISCAL RELATIONS BETWEEN THE UNITED STATES AND THE 

DISTRICT OF COLUMBIA. 


To the Senate and the House of Representatives of the United States 
of America: 

Your committee, appointed pursuant to the act of Congress ap¬ 
proved June 29, 1922, which contains the following provision: 

A joint select committee, composed of three Senators to be appointed by the 
President of the Senate and three Representatives to be appointed by the Speaker 
of the House of Representatives, is created and is authorized and directed to inquire 
into all matters pertaining to the fiscal relations between the District of Columbia 
and the United States since July 1, 1874, with a view of ascertaining and reporting 
to Congress what sums have been expended by the United States and by the District 
of Colurnbia, respectively, whether for the purpose of maintaining, upbuilding, or 
beautifjdng the said District or for the purpose of conducting its government or its 
governmental activities and agencies, or for the furnishing of conveniences, com¬ 
forts, and necessities to the people of said District. Neither the cost of construc¬ 
tion nor of maintenance of any building erected or owned by the United States for 
the purpose of transacting therein the business of the Government of the United 
States shall be considered by said committee. And in event any money may be or 
at any time has been by Congress or otherwise, found due, either legally or morally, 
from the one to the other, on account of loans, advancements, or improvements made, 
upon which interest has not been paid by either to the other, then such sums as have 
been or may be found due from one to the other, shall be considered as bearing 
interest at the rate of 3 per centum per annum from the time when the principal 
should, either legally or morally, have been paid, until actually paid. And the 
committee shall also ascertain and report what surplus, if any, the District of Co¬ 
lumbia has to its credit on the books of the Treasury of the United States which has 
been acquired by taxation or from licenses. And the said committee shall report 
its findings relative to all the matters hereby referred to it to the Senate and House, 
respectively, on or before the first Monday in February, 1923. The chairman or 
acting chairman of said committee hereby is empowered to administer oaths or 
affirmations. The committee also is empowered to compel witnesses to attend its 
meetings and to testify, and also to compel the production of such books and papers 
as it may deem desirable. Any person who has been duly notified to appear before 
the committee either as witness or witness duces tecum, and fails so to do, shall be 
deemed guilty of contempt of Congress, and therefore may be punished to such 
extent as either the Senate or the House may determine; and said committee shall 
determine whether the proceeding for contempt shall lie with the House or the 
Senate. The committee may employ such accountants and stenographers to assist in 
the work as may be necessary, but the same qualifications for such accountants shall 
be required as was required of accountants by section 6 of the act of June 30. 1874, 
entitled “An act for the government of the District of Columbia and for other pur¬ 
poses,” and no one shall be so employed as accountant who is or has been heretofore 
an officer or employee of the District of Columbia or the United States. No employee 
of said committee shall be paid more than $25 a day while actually at work. The 
Attorney General of the United States hereby is authorized and directed to assign 
a competent attorney from his regular force of attorneys to represent the United 
States before said committee; and any Member of Congress shall be permitted to 
examine any witness and argue any question before the committee. For the pay¬ 
ment of salaries of accountants and stenographers, for printing and binding, and 
other necessary expenses of the committee, there is appropriated 40 per centum out 
of the Treasury of the United States and 60 per centum out of the revenues of the 
District of Columbia, the sum of $20,000, to be paid out upon vouchers approved by 
the chairman or acting chairman of the committee, 

begs leave to submit the following report. 


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PART I. 


Titi.e I. —Functions or the Committee. 

The (‘ommittee met on July 1922, organized, and elected Law¬ 
rence C. Phipps, a Senator from the State of Colorado, as chairman. 
Since said date numerous meetings and hearings have been held in 
the city of Washington. At a subsequent meeting, the chairman 
reported the appointment of C. Brooks Fry as secretary, under the 
authority conferred upon him by the committee, and the appoint¬ 
ment was confirmed. 

In accordance witli the powers conferred under the terms of said 
act of June 29, 1922, the committee employed Messrs. Haskins & 
Sells, accountants and auditors, with general offices in New York 
City and Baltimore, Md., who have stated the account between the 
United States and the District of Columbia, in accordance with the 
instructions of the committee, as hereinafter disclosed. 

^Vmong others there were called into conference the following: 
James F. Oyster, Cuno H. Rudolph, and Col. C. Keller, Commis¬ 
sioners of the District of Columbia; D. J. Donovan, District auditor; 
Herman J. Galloway, special assistant to the Attorney General, 
selected pursuant to the provisions of the act to represent the United 
States; Earl Taggart, of the General Accounting Office; L. G. Graesle, 
of the Division of Bookkeeping and Warrants, Treasury Department; 
and the Citizens’ Joint Committee of the District of Columbia. The 
committee also had before it certain Members of Congress, including 
Senators Jones of Washington and Glass and Representatives 
Cramton and Johnson of Kentucky. 

Messrs. Haskins & Sells made a preliminary report in writing on 
NoA'ember 20, 1922, and filed a final report containing conclusions, 
recommendations, and tables on January 11, 1923. Subsequently 
written reports were received from Messrs. Galloway, Taggart, 
Donovan, the citizens’ joint committee, and Mr. Thomas Hodgson. 

Your committee, after careful consideration of the entire subject, 
including more particularly the matters referred to in said reports of 
the accountants and others, has come to certain definite conclusions 
which are contained in this report. 

At the outset the committee considers a brief statement of the 
peculiar relations existing between the Federal and the District 
Governments to be not only helpful but necessary in order to compre¬ 
hend fully and fairly the questions involved. 

Washington, the Capital of the Nation, is a city altogether under 
the control of the United States Government. Its administrative 
officials are appointed by the President, by and with the consent of 
the Senate, and its laws are enacted by the Congress. From the 
start it has been the desire of the legislative body, as well as, for that 
matter, of the residents of the city, and certain officeholders here 
who maintain a legal residence elsewhere, to make it a beauty spot 
of America, of which our citizens might be justly proud. Hence the 
expenditures for public improvements have been inordinate as com- 

3 


4 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 

pared to those of other communities of approximately the same size 
and population. 

In some cases these e:jq)enditures have been authorized upon the 
recommendation of the District Commissioners, who are local resi¬ 
dents selected by the President. In many other instances the Con¬ 
gress, in the exercise of its rightful prerogative, refusing to follow 
such recommendations, has appropriated more or less than desired, 
as the case may be, and for different purposes. 

From 1878 to 1921, as a rule, 50 per cent of all the District expenses 
were borne by the Federal Government and 50 per cent came from 
the residents of the city. However, the law at present provides 
that the share of the United States shall be 40 per cent and that of the 
District 60 per cent. As in the case of the actual appropriations 
themselves, these proportions have been fixed by the Congress, in 
which citizens of Washington have no representation. 

For many years liberal appropriations were made to carry out the 
program of city beautification, during which period of time the Dis¬ 
trict was in debt to the Federal Government. The accountants’ 
report shows that prior to 1914 there was a balance due the United 
States, but that at the end of that fiscal year the District had a credit 
balance of $68,300. 

Then came the war period and expenditures for further develop¬ 
ment were necessarily limited; yet no reduction was made in the rate 
of tax assessments. The District tax receipts increased, as a matter 
of fact; the money was deposited in the United States Treasury, and 
a surplus created, largely due, as will be observed, from failure to 
continue the proper extension of streets, their paving and repaving, 
the building of public schools, and the upkeep of other city activities, 
corresponding to the growth of the city. 

It is with this surplus that your committee has to deal, among other 
things. On the one hand it is urged by some that the spirit of the 
entire system of fiscal relations between the two Governments, 
existing since 1878, was violated by the creation of such a fund. 
It is pointed out that, had the 50-50 rule been adhered to, as pro¬ 
vided by law, there would be no such surplus, as the money in question 
would have been expended for schools, streets, and other municipal 
activities and improvements. It is therefore claimed that the Dis¬ 
trict is entitled to the entire fund, which should be applied to the 
maintenance of its government and other activities, and should be 
matched by Federal money, according to law. 

On the other hand, it has been asserted that the District has no 
legal claim against any money now in the United States Treasury 
which has been accumulated in this fashion. 

It is argued that there is no law upon which the District can 
predicate a legal claim to any sums of money in the Treasury, whether 
ascertained as to amount or not; that such a claim is, to say the least, 
unenforceable at law and hence equitable or moral in its nature. 
Being merely equitable it follows from this reasoning that equitable 
defenses, counterclaims, offsets, and credits, may be asserted to reduce 
the amount of said surplus, to wipe it out altogether, or possibly to 
show that the District is equitably or morally indebted in large sums 
to the Federal Government. Parenthetically, no one has urged before 
your committee, irrespective of the magnitude of the claim or offset 
insisted upon, that, inasmuch as the equitable balance might be con- 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 5 


sidered as being in favor of the United States, collection of such bal¬ 
ance from the District, therefore, should be recommended to the 
Congress. 

The foregoing reveals the occasion for the creation of your commit¬ 
tee, and is illuminating when the language of the act is under con¬ 
sideration, to determine the scope of the committee’s work and the 
nature of the report which should properly be made to the Congress. 

Briefly, it is the understanding of your committee that it is required 
to make such findings and recommendations as would bear directly 
upon this primary question of the District surplus, and could be used 
by the Congress, in its discretion, as a basis for settling for all time 
the claims and contentions arising out of this matter. 

Of course, the scope of the committee’s work has also been deter¬ 
mined in other ways, including a close examination of the language 
of the act. On this point the committee submits its views, subject 
to the judgment of the Congress. A statement of the same' is deemed 
necessary at this time because it has been contended that under the 
language of the act this is little more than a fact-finding committee, 
and that its object is mainly accomplished if it furnishes the Congress 
with a vast array of tabulated figures from which Members of that 
body may draw their own conclusions with few, if any, specific 
recommendations on the part of the committee. The following 
portion of the act is emphasized in this connection: 

A joint select committee * * * is directed to inquire into all matters pertaining 
to the fiscal relations between the District of Columbia and the United States since 
•Tuly 1, 1874, with a view of ascertaining and reporting to Congress what sums have 
been expended by th^ United States and by the District of Columbia, respectively, 
whether for the purpose of maintaining, upbuilding, or beautifying the said District, 
or for the purpose of conducting its government or its governmental activities and 
agencies, or for the furnishing of conveniences, comforts, and necessities to the people 
of said District. 

Certain witnesses have contended that this language properly in¬ 
cludes all expenditures made by the United States for maintaining, 
upbuilding, and beautifying the District since July 1, 1874, whether 
or not the same had ever been considered by the Congress as in any 
way affecting the fiscal relations between the District of Columbia 
and the United States; and that it includes such activities as the 
erection of the Lincoln Memorial, statues of national heroes, the Con¬ 
gressional Library, and various other large expenditures. 

At least one of the witnesses has declared that, while it was not 
incumbent upon the committee to recommend that such items as the 
Lincoln Memorial be considered under the above language, as matters 
to which the 50-50 or 60-40 ratio was properly applicable, yet it was 
the duty of the committee to report on all such items for the con¬ 
sideration of the Congress in the determination of this question. 

Another witness. Congressman Johnson of Kentucky, after men¬ 
tioning the Lincoln Memorial and similar public works, stated that— 

It is my unqualified opinion that the cost of the Congressional Library and every¬ 
thing in it and 3 per cent interest must be offset against any claim of surplus. • This 
language is mighty plain when you come to read it carefully. 

Other witnesses have insisted with equal emphasis that such things 
sliould not be considered for a moment in a report on the fiscal rela¬ 
tions existing between the District of Columbia and the Federal Gov¬ 
ernment. 


6 


FISCAL DELATIONS BETWEEN 


r. S. AND DISTRICT OF (’OLILMBIA. 


Your committee has had the subject under advisement, and in 
this connection called upon Mr. Galloway, as the representative of the 
Department of Justice and of the United States, for his opinion. 
The committee submits to the judgment of the Senate and of the 
House of Representatives its conclusion that this provision of the act 
should not be given a strict literal interpretation, in disregard of the 
purpose and intention of the act as a whole, and of^other provisions 
of the act. In his opinion Mr. Galloway states: 

I am fortified in this conclusion by a consideration of the act as a wliole, the title 
of which indicates that it is an act dealing with proportional appropriations for the 
government and other activities of the District of Columbia. It is an act directed 
wholly toward the consideration of those things which are primarily and solely for the 
interest of the District of Columbia. All of the act preceding the paragraph quoted 
deals with an arrangement for proportional appropriations and for expenses primarily 
for the support of the District of Columbia. The committee is created ‘“to inquire 
into all matters pertaining to the fiscal relations between the District of Columbia 
and the United States since July 1, 1874. ” All past legislation upon the fiscal relations 
between the District of Columbia and the United States, so far as I have been able to 
ascertain, involves expenditures primarily for the benefit or for the maintaining, 
upbuilding, or beautifying of the District of Columbia and conducting its activities, 
and Congress seems to have had such things always in mind when it considered these 
fiscal relations. There is nothing in any of the acts indicating that Congress ever 
intended that such expenditures as for the lAncoln Memorial or the C‘ongressional 
Library were made for the primary purpose of beautifying the District of Columbia, 
and even some of those urging a construction which would include such expenditures 
have stated that they do not think that the District should bear any proportion thereof. 
Can it be logically contended that Congress was directing this committee to do a 
useless thing? Further, should not this act have such construction as would make it 
reasonable and susceptible of execution? If it is held to include all of these expendi¬ 
tures it is conceded by most all that the task would be so enormous and the expense 
so great that the same could not be accomplished either within the time fixed by 
Congress or with the amount of money appropriated. All of these things sustain 
the conclusion which I have heretofore expressed that this act should not have a 
strict literal interpretation in disregard of the act as a whole. It is my opinion that 
this requires your committee to report to Congress what sums have been expended 
by the United States and by the District of Columbia, respectively, whether expended 
primarily for the purpose of maintaining, upbuilding, or beautifying the said District 
or primarily for the purpose of conducting its government or its governmental acti\'ities 
and agencies, or for the furnishing of conveniences, comforts, and necessities to the 
people of the District, excluding the cost of construction or of maintaining any build¬ 
ing erected or owned by the United States for the purpose of transacting therein the 
business of the (xovernment of the United States, and that your report need not 
include expenditures which do have the effect of upbuilding or beautifying the 
District of Columbia but which were erected by Congress primarily for another pur¬ 
pose and which incidentally did in fact upbuild or beautify said District, 

In a few words, your committee believes that the language con¬ 
tained in the clause in question, which reads joint select com¬ 
mittee * * * is directed to inquire into all matters pertaining 
to the fiscal relations between the District of Columbia ancl the 
United States since July 1, 1874,” not only defines, but limits the 
scope of the committee’s investigation to matters that properly 
pertain to such fiscal relations; that the words ‘Hor the purpose” 
mean ‘U’or the purpose,” and not ‘‘for the secondary purpose” or 
“having the incidental effect”; that in the act reference to the 
surplus is made in apt words; that the act must be construed as a 
whole; that the task assigned must be considered as possible of 
accomplishment; and that when all these factors are taken into con¬ 
sideration, including the occasion for the creation of the committee, 
the intent and meaning of all the language of the act is clear. 

Your committee is anxious to carry out completely the mandate 
of the Congress, and hence deems it its duty to call attention to the 


FISC’AI. 


KKLATIOXS BETWEEN 


T\ S. AND DISTRU'T OF (’OLUMBIA. 


7 


various constiTictions which have been urged, and to set forth its 
conclusions in some detail. 

As a part of the findings required under the law, your committee 
has included in this report tabulated figures, secured as a result of its 
incjuiry into all matters pertaining to the fiscal relations between the 
two Governments, from July 1, 1874, to June 30, 1922, inclusive, 
which show what sums have been expended by the United States 
and the District of Columbia, respectively, for the purposes enu¬ 
merated. 

On the merits of the particular ({uestion which has been used as 
an illustration, it is the sense of your committee that no portion of 
expenditures made wholly out of Federal funds for the purpose of 
the construction of national memorials or monuments in honor of 
any national hero or character, or in commemoration of any national 
event shall, in making up the fiscal balance, be chargeable to the 
District of Columbia. 

Title II. —Work of the Committee. 


At the beginning of its labors, your committee had its attention 
called to the fact that investigations had already been made under 
authority of the Congress, intending to cover the fiscal relations 
between the two Governments during the period up to June 30, 
1911; and that the reports on such investigations had been acted 
upon by the Congress. Messrs. Haskins & Sells were, therefore, 
directed to make a detailed audit and examination of the District 
accounts from June 30, 1911, to June 30, 1922, inclusive, and in 
addition to bring to the consideration of the committee any other 
items pertinent to the inquiry to which their attention was called 
or which came under their observations, and which existed during 
the period between July 1, 1874, and June 30, 1911. This detailed 
audit has been made, and a report submitted by the accountants, 
which includes references to certain outstanding items arising prior 
to the latter date. 

It has been suggested, however, that the investigations made 
relative to these earlier years were not as thorough or comprehensive 
as they should have been; that errors may not have been detected 
in every instance, and that the reports of the investigators could not 
be considered complete. Your committee, thereiore, after the 
report of Messrs. Haskins & Sells was received, seriously reconsidered 
the advisability, not to say the necessity, under the direction of the 
act of June 29, 1922, of authorizing the same kind of an intensive 
audit over the period already covered by these prior investigations. 
In that event it would have been necessary to ask the Congress for a 
year’s additional time, at least, within which to make a final report, 
and for an additional appropriation of many thousand dollars. As 
will be recalled $20,000 was originally set aside for this purpose, a 
small portion of which remains unexpended. 

In this respect also your committee desires to submit its conclu¬ 
sions, with a brief statement of its reasons, to the judgment of the 
Congress. 

The act of March 3, 1909, enumerated certain advances made from 
time to time to the District government, and directed that, within 


8 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


five years, the money should be repaid by the District into the 
United States Treasury, together with interest at the rate of 2 per 
cent per annum. The principal of the sum refunded was $2,665,081.81 
and the interest amounted to $101,313.28. It was, therefore, de¬ 
sired to clear up all remaining questions, and certain accountants 
were detailed by the Sixty-second and Sixty-third Congresses, 
through the proper committee, to make an audit which would be 
final and conclusive. 

One of these investigations was made into the general account of 
the District of Columbia with the United States, by Messrs. L. Scott 
Mayes and J. R. Mayes, accountants who were employed by and re- 
p^orted to the special committee investigating the affairs of the 
District of Columbia under House Resolutions Nos. 154 and 200, 
of the Sixty-second Congress, and House Resolution No. 203, of the 
Sixty-third Congress (H. Doc. 1627). Said report stated the balance 
in the general fund of the District of Columbia on July 1, 1911, and 
was described by the committee as a finished report.” This was an 
investigation of the accounts between the two governments, as they 
relate to the revenues of the District, and to the appropriations 
made from the revenues of the United States to the District, and the 
advances made from both by the Secretary of the Treasury of the 
United States, as authorized by the various acts of Congress since 
the passage of the act of June 11, 1878, to and including the fiscal 
year ended June 30, 1911; and also all appropriations and advances 
made by the United States to the District of Columbia from June 20, 
1874, to June 30, 1878, inclusive, which affect the account between 
the two governments. Said investigation required approximately 
three years’ time and resulted in the discovery of certain items in 
considerable amount for which reimbursement was required by the 
United States from the District of Columbia. These were as follows: 

Reimbursement on account of unpaid balance of advances to defray 


District expenses for fiscal year 1878, required under act of July 11, 

1919... $75,000.00 

Reimbursement on account of advances for support of public schools, 

1877, required under act of July 11, 1919. 75, 000. 00 

Reimbursement on account of constructing school building in George¬ 
town, required under act of July 11, 1919. 50, 865. 00 

Reimbursement for interest on 3.65 District of Columbia bonds for 1877 

and 1878, required under act of Mar. 4, 1915. 586, 067. 23 

Reimbursement on account of Freedman’s Hospital, required under act 

ofAug. 1,1914. 37,996.70 

Reimbursement on account of support of insane in St. Elizabeths Hos¬ 
pital, 1881 to 1911, act of Mar. 4, 1913. 719, 536. 07 

Reimbursement on account of support of insane in St. Elizabeths Hos¬ 
pital, as in full, required under the act of July 1, 1916. 282, 764. 26 

Reimbursement on account of construction of District jail, required under 

act of Aug. 31, 1918. 125, 000. 00 

Reimbursement on account of advances to pay teachers in public schools 
in 1874, required under act of Aug. 31, 1918. 97, 740. 50 


Making a total of. 2,049,969. 76 


A second investigation was made by W. W. Spalding, accountant, 
who examined the miscellaneous and general revenue accounts be¬ 
tween the United States and the District of Columbia from 1874 to 
the date of the inquiry. These accounts were checked up carefully 
by Mr. Spalding, who was employed intermittently between the 
years 1913 and 1918. His recommendations were in every instance 













FISCAL RELATIONS BETWEEN V. S. AND DISTRICT OF COLUMBIA. 9 


favorably acted upon by the Congress, and certain refunds to the 
United States were required from the District, as follows: 


Reimbursement on account of Washington Market Co., rentals 1878 to 

1914, required under act of Mar. 4, 1915.$158, 437. 50 

Reimbursement on account of fines in United States cases in criminal 
division of supreme court, District of Columbia, between July 1, 1878, 

and June 30, 1908, required under act of Apr. 17, 1917. 24, 300. 76 

Reimbursement on account of fines in United States branch of police 
court between July 1, 1878, and Jan. 1, 1902, required under act of 
Apr. 17, 1917. 211,450.12 


Making a total of. 394,188. 38 


Mr. Spalding appeared before your committee and testified that 
the work was done as thoroughly as practicable, but that he believed 
at the conclusion of his labors, and believes now, that certain other 
items totaling possibly $60,000 or $70,000 should be investigated. 
Later on he furnished your committee with a memorandum of these 
items, and it was disclosed that, except in three instances, they had 
already been considered by it. 

These three remaining items have since been investigated by your 
committee and are set forth under the head of Title IV of this report. 

As heretofore stated, Messrs. Haskins & Sells were also required to 
call attention to any items noted by them arising during the period 
between July 1, 1874, and June 30, 1911, which might have a bearing 
on this investigation. In a summary of their report, dated January 
17^ 1923, they state: 

Certain of the items referred to in the foregoing synopsis would be affected by 
transactions prior to July 1,1911. In order to complete the inquiry into such questions 
it would therefore be necessary that the examination be extended prior to July 1, 1911, 
so as to cover the entire period comprehended by the act creating your committee. 

But as to each of said items arising prior to 1911 your committee 
has found, as will be hereinafter shown under the head of Title IV, 
that they were properly charged and that there is nothing due from 
one Government to the other. The ones concerning which adjust¬ 
ment is recommended by your committee, and which are listed under 
Title III, have no possible relation to transactions prior to June 30, 
1911. Also the committee’s consultants, Messrs. Galloway, Taggart, 
Donovan, and the citizens’ joint committee, are in complete agree¬ 
ment as to the existence of the surplus and practically in accord as to 
the propriety of rejecting possible equitable credits between 1874 
and 1911, suggested for consideration by the committee’s accountants. 

Again, your committee is advised that many of the official records 
and memoranda necessary to a satisfactory audit have long since 
been destroyed, and that however great might be the diligence of 
the accountants, a complete and thorough audit for the entire period 
in question could hardly be secured. 

We submit that the above statement of what the facts actually are 
speaks for itself, and we are content to leave it to the judgment of 
the Congress whether or not another audit at this late date would be 
at all justified. As practical men we can not escape the conclusion 
that the investigations made in this and prior audits are as thorough 
as required for the purposes of the act, and that, in the absence of 
certain records, they are as satisfactory and complete as any audit 
could ever be. 


32894—S. Doc. 301, 67-4 


2 








10 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


No witness appearing before the committee has testified that a 
further detailed audit would be advisable, while, on the other hand, the 
Citizens’ Joint Committee, Representative Johnson of Kentucky, and 
Mr. Thomas Hodgson, an employee of the Treasury Department, who 
stated the account of the District for more than 30 years, have all 
spoken against the necessity for or advisability of the same. No 
witness who has testified before the committee has been able to bring 
up any items of dispute which have not been investigated. 

Your committee therefore believes that a further detailed audit 
would be a decided waste of time and money and would serve no good 
purpose. Neither is the same necessary, according to our belief, 
under the provisions of the act of June 29, 1922, which must be con¬ 
sidered with reference to their practical effect. 

Your committee therefore recommends that the investigations 
already made be taken as a basis upon which definite and final action 
should be had by the Congress. 

Title HI. —Claims Recommended for Adjustment. 

As a result of the inquiry, your committee finds that the various 
items appearing in the annual appropriation bills for the District of 
Columbia, enacted during the entire period specified in this act, have 
been properly allocated between the District of Columbia and the 
United States, with the exception of several small items. These have 
either been corrected by prior action of Congress or are included under 
this title in this report. 

Your committee also finds that certain other items, which can not 
properly be 6ionsidered as accounting and bookkeeping errors, and 
which are considerably larger in amount, have either been settled by 
prior legislation or are covered by the recommendations contained 
under this title in this report. 

Your committee also submits that certain additional items, which 
have been called into question, have been considered by its members 
and reported under the head of Title IV of this report, with the 
recommendation that they should be held to have been properly 
accounted for, and that no changes in the account between the District 
of Columbia and the United States should be made in respect to the 
same. 

1. The committee reports, as its first finding, that at June 30, 1922, 
the credit balance. District of Columbia general fund, in the United 
States Treasury, certified to by the Comptroller General of the 
United States, and as shown in Exhibit A of the report of Messrs. 
Haskins & Sells, certified public accountants, was $7,574,416.90, 
which is $5,260.67 less than that shown by the records of the auditor 
of the District of Columbia. The committee understands that the 
difference is being investigated and will be properly adjusted. Your 
committee also finds that the records of the District appropriation 
ledgers show encumbrances against that balance, on account of 
unexpended appropriations, aggregate $2,077,616.24; and also further 
obligations to the amount of $825,603.69, which will eventually 
have to be paid out of this fund; that, subject to the correctness of 
the liability above stated, which can be accepted for all practical 
purposes, the free surplus at June 30, 1922, was $4,671,196.97. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 11 


2. The accountants have called attention to certain errors in 
stating the account between the two governments, and have recom¬ 
mended that the net amount of $665.46 be credited to the District. 
Messrs. Galloway and Taggart also suggest adjustment of these 
matters on the basis of figures submitted by Messrs. Haskins & 
Sells, and in this recommendation the committee concurs. 

3. As a partial offset against these credits the committee recognizes 
that the United States is entitled to reimbursement on account of the 
$240 annual bonus paid to certain classes of District employees, 
and which, up to the present fiscal year, came solely from Federal 
funds. 

The accountants, without definitely committing themselves, call 
attention to the fact that such general increases in compensations of 
certain employees have been charged wholly against Federal appro- 

E nations, while the regular salaries, other than the increases, have 
een charged proportionately against the United States and the 
District of Columbia. 

Here is an evident oversight by the Congress, due no doubt to the 
fact that provisions for such bonus have been inserted from time 
to time in measures other than the District of Columbia bill. The 
appropriation act for the present fiscal year made the necessary 
correction as to the future. There is no doubt concerning the policy 
of Congress in the matter, and your committee recommends that the 
District should pay its proportionate share of increased compensa¬ 
tion in such cases as enumerated by the accountants in their report. 
This share amounts to $191,890.35. 

The above is in accordance with the recommendations of Mr. 
Galloway and Mr. Taggart, while Mr. Donovan and the Citizens’ 
Joint Committee make no argument on the question. 

4. Another item of somewhat similar nature arises in connection 
with appropriations of $80,000 and $2,500 made in the acts of June 5, 
1920, and March 4, 1921, respectively, for the purchase of land in 
connection with the National Zoological Park. The cost of land 
previously secured for this purpose Was charged proportionately to 
the Federal and the District Governments; and your committee can 
see no reason for an exception in these two cases. It is believed that 
this is another oversight, caused by the fact that the appropriation in 
question was not contained in the District bill. 

In this position your committee has the support of Mr. Taggart 
and, by inference, of the accountants. Mr. Galloway states that the 
moral question is the only one involved, as legally the matter is 
settled, while Mr. Donovan is content to leave the matter to the 
determination of the Congress. 

The Citizens’ Joint Committee, on the other hand, advocates not 
only that this sum be charged wholly against the Federal Govern¬ 
ment but also that there should be a refund to the District of moneys 
heretofore contributed for such park purposes. Your committee, 
however, is unwilling to disturb the evident intention of Congress in 
this respect, and in addition believes that sufimient benefits are 
derived from the park by local residents to justify the District’s 
share in the expenditures involved. 

The recommendation, therefore, is that $41,500 be charged against 
the District as its proper proportion of such expenses. 

5. The accountants show that the amount of $634.33 was paid out 
of Federal revenues for the relief of Eldred C. Davis on account of 


12 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLL^MBIA. 

loss occasioned by a larceny in the office of the collector of taxes. 
As there is no equitable reason why the United States should have 
borne the entire cost, your committee recommends that $317.17, 
one-half of said amount, should now he charged against the District. 

Mr. Taggart views the matter in this light, while Messrs. Donovan 
and Galloway make no recommendation. The Citizens’ Joint Com¬ 
mittee can not understand why the District government should have 
anything to do with the matter. 

Title IV.—Items Already Properly Charged. 

Certain other items have been pointed out by Messrs. Haskins & 
Sells with the comment that although they may not be proper mat¬ 
ters for adjustment, yet they should at least be interesting in con¬ 
nection with future legislation dealing with District fiscal relations. 

In the opinion of your committee all of the following have been 
properly charged, and it is recommended that in all of such cases no 
sums shall be considered as being due, either legally or morally, from 
the one government to the other. 

1. The first one is summarized by the committee’s accountants in 
a letter to the chairman dated January 17, 1923: 

In our opinion the general fund should be charged with 1545,484.54, as follows: 
Redemption of District 5 per cent bonds issued under the act of Congress 
approved June 10, 1879 (exclusive of participation in interest pay¬ 
ments and premiums paid on redemption), charged against the LTnited 
States in violation of provisions of the act of Congress, as shown on 


page 44 of our report (50 per cent of 11,092,300). $546,150. 00 

Less adjustment of errors as enumerated on page 34 of our report. 665. 46 

Remainder. 545, 484. 54 


The act in question authorized the District Commissioners to issue 
certain bonds of the District, redeemable 20 years after date, to an 
amount not exceeding $1,200,000. The committee’s accountants base 
their contention on a provision contained in the act, to the effect that 
it should not be construed to make the Federal Government liable for 
any part of the principal or interest on the bonds, and they point out 
that such payments were eventually made jointly from the revenues 
of the United States and of the District. 

However, such reimbursement was made on the 50-50 basis, in 
accordance with the express authorization of the Congress, contained 
in several subsequent acts. In the opinion of this committee Con¬ 
gress had knowledge, actual as well as constructive, of the provision 
contained in the act of June 10, 1879, and deliberately intended to 
place payment of the principal and interest of these bonds on the 
same basis as other District expenditures. Such is the view expressed 
by the District auditor and the Citizens’ Joint Committee, while Mr. 
Taggart, of the General Accounting Office, does not give his opinion 
because he believes the question is one of legal interpretation. Mr. 
Galloway, representing the Department of Justice, reiterates that in 
subsequent appropriation acts it is expressly recited that so much 
money be appropriated, 50 per cent from the revenues of the Dis¬ 
trict and 50 per cent from the moneys of the United States, ^Hor the 
payment of interest and sinking fund of the District.” He adds 
that Congress certainly had a right to do this, and, even though the 
provisions of former acts were in conflict with such appropriations, 
the subsequent action of Congress must be held to control, the 






riSCAL RELATIONS BETWEEN TJ. S. AND DISTRICT OF COLUMBIA. 13 


question being now legally settled. This position is supported by 
decisions of the Comptroller of the United States Treasury. 

Your committee inclines strongly to this view, and believes it 
worthy of note that the Mayes-Spaiding investigations brought this 
matter fully to the attention of the Congress, which failed to include 
the item in those for which reimbursement was then required from 
the District. 

2, The next principal item to which the committee’s accountants 
invite consideration also dates back to the time when the present 
form ot government was established in the District of Columbia by 
organic act of Congress. The United States then assumed 50 per 
cent of the debt of the District outstanding on June 30, 1878. There 
were, however, uncollected taxes amounting to $1,622,739.75, which 
were later deposited in the United States Treasury solely to the 
credit of the District. The question arises whether such action was 
proper, or whether the Federal Government should have been 
credited with 50 per cent of such tax collections. 

Here, again, in the opinion of your committee, the law controls, 
reflecting as it does the evident intention of the Congress. The 
purpose of the organic act was to wipe the slate clean, to provide 
lor the payment of prior and future obligations on a 50-50 basis, 
and to turn over to the District authorities what assets existed at 
the time. Messrs. Galloway, Donovan, and the Citizens’ Joint 
Committee are in accord with this view, while Mr. Taggart takes a 
neutral position. 

The following extract from the Galloway report states the situation 
clearly: 

The organic act of June 11, 1878, provides that the Commissioners of the District 
shall have power to apply the taxes and other revenues of the District to the payment 
of the expenses thereof, and that they shall take over the books, papers, records, 
money, credit, securities, assets, and accounts belonging or appertaining to the busi¬ 
ness or interests of the District; and another part of the same act provides that all 
taxes shall be paid in the Treasury of the United States and the same, as well as the 
appropriations to be made by Congress, shall be disposed for the expenses of said 
District on itemized vouchers, etc. In other words, it seems that there was an inten¬ 
tion to change the forms of government, giving to the new form whatever assets that 
had accrued or were in the process of accruing for the purpose of beginning and carrying 
on the new plan. Even actual money then on deposit was transferred to be used in 
accordance with the new plan, and it certainly was not the intention of Congress to 
deprive the District of all means during the first year of carrying out its duties under 
this new plan. Had these taxes, uncollected at June 30, 1878, been used for other 
purposes than the purposes of the new form of government, the District would have 
been unable to contribute one cent toward carrying out its part of said plan until 
it was able to assess and levy a new tax. Certainly Congress did not intend that by 
this legislation, and, in fact, the express provisions of the statute above referred to 
indicate a contrary intent; so that it is my opinion that from a legal standpoint this 
question is also settled, as Congress clearly showed that it intended that these uncol¬ 
lected taxes be deposited in the Treasury to the credit of the District exactly as they 
were deposited. 

The above is another item which was called to the attention of 
the Congress in the May es-Sp aiding investigations. 

3. The largest item to which the accountants refer, without 
making definite recommendation, consists of receipts from licenses,, 
privileges, etc., totaling $6,300,058.57 for the fiscal years 1912 to 
1922, inclusive. These, in the opinion of your committee, fall ctearly 
in the same category as local taxes, and were properly collected and 
deposited wholly to the credit of the District of Columbia. The 


14 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


organic act is specific on that point. After the requirement that 
annual estimates of proposed District expenditures should be trans¬ 
mitted to Congress, it provides that— 

To the extent to which Congress shall approve of said estimates, Congress shall 
appropriate the amount of fifty per centum thereof, and the remaining fifty per 
centum of such approved estimates shall be levied and assessed upon the taxable 
property and privileges in said District other than the property of the United States 
and the District of Columbia. 

District Auditor Donovan, in his report, cites several decisions of 
the Comptroller of the Treasury which refer to this language and 
appear to settle the question conclusively in the District’s favor. 
The arguments advanced under this head in the brief of the Citizens’ 
Joint Committee also appeal to your committee as being sound and 
based upon correct rules of legal construction. 

It is, of course, quite within the province of the Congress to pro¬ 
vide for a different disposal of future collections, and from time to 
time the receipts from certain privileges have been placed, by act 
of law, jointly to the credit of the District and the Federal Govern¬ 
ment. But except in cases where such specific provision is made 
the District has been entitled, according to your committee, to the 
full amount of such receipts. 

Mr. Galloway, in his report, confirms this view that legally such 
fees and licenses should be credited wholly to the District, as has 
been done. Mr. Taggart ‘‘can see no reason why the District should 
now be charged with any part of these collections,” with the ex¬ 
ception of a small item known as special reimbursable taxes, amount¬ 
ing, during the period covered by the accountants’ report, to S9,- 
014.23. It is admitted that according to the law^ these latter items 
should be collected in the same manner as general taxes in the Dis¬ 
trict of Columbia, and the committee can not see how a valid dis¬ 
tinction can be made as to this class of miscellaneous collections. 

4. Another matter referred to by the accountants, without any 
specific recommendation, arises from the fact that certain United 
States Army officers have been assigned from time to time to duty in 
the District government. Their compensation, consisting of pay and 
allowances, comes wholly out of the revenues of the United States. 
This is also true of civil employees of the General Accounting Office, 
who have been called upon to work on District accounts. The full 
amount of such Army officers’ compensation, between the years 1912 
and 1922, is given as $282,422.18. 

There is no question but that there is specific legislative authority 
for the payment of such Army officers by the United States, and for 
their detail to the District government; neither is there any doubt 
as to the existence of statutes creating the positions held by employees 
in the General Accounting Office and the Treasury Department who 
keep the District accounts. These employees, of course, are selected 
primarily to safeguard the interests of the Federal Government. 

More than this, the arrangement relating to Army officers carries 
out the general policy of the Congress. As pointed out by Mr. Tag¬ 
gart, who declines to make a recommendation, it has not been the 
policy to charge for the services of such engineer officers for river and 
narbor improvements, and for other purposes, even where the whole 
cost of the work is paid by States, municipalities, or by private 
interests. 


P ISC^AL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 15 


Mr. Galloway, Mr. Donovan, and the Citizens’ Joint Committee 
concur in the views of your committee that no part of this item should 
properly be charged to the District. 

5. An item to which the accountants have also called attention is 
that certain collections made by the clerk of the Supreme Court of 
the District, for the issuance of certain licenses and for fines assessed 
against jurors, are covered into the Treasury wholly to the credit of 
the Federal Government. The accountants recommend that the 
committee consider the item, while Mr. Taggart suggests an appor¬ 
tionment between the United States and the District as to such col¬ 
lections subsequent to June 30,1922, which the committee understands 
is covered under the terms of the District appropriation act for the 
present fiscal year. 

There is no question but that there was sufficient authority of law 
to justify the deposit of these funds wholly to the credit of the United 
States, and your committee believes it consistent to recommend that 
they should not be disturbed. A ruling in support of this position 
was made by the Comptroller of the Treasury under date of 
December 13, 1920. The entire sum involved is $175,870.99. 

6. The cost of erecting and furnishing the District of Columbia 
Court of Appeals building, provided for by the act of May 30, 1908, 
aggregated $263,600, all of which was paid by the Federal Govern¬ 
ment. Salaries of employees and miscellaneous expenses of this 
building since its completion have been apportioned between the 
United States and the District of Columbia. 

Your committee’s attention has been called to the fact that, in 
addition to considering appeals from the Supreme Court of the 
District, this appellate court also has original jurisdiction in cases 
involving patents, and that this business is of considerable volume. 
Many suits are also brought in or carried to this court on account of 
the fact that one of the parties is an official of the United States 
Government. Neither of these classes of cases can be properly 
considered as District matters. 

In view of the various phases of this question which have been 
presented, your committee does not feel justified in recommending 
that the matter of the cost of erecting this court of appeals building 
should be reopened. 

This item, as well as those which follow, has been brought to the 
attention of your committee in the conduct of its hearings, but was 
not commented upon in the various reports hereinbefore referred to. 

7. The annual report of the Commissioners of the District of 
Columbia for the year 1896 (p. 96) refers to a judgment of $65,740.47, 
secured in the old case of the District v. The Metropolitan Railway 
Co. for paving done in the years 1871 to 1875. The entire amount 
was paid to the collector of taxes of the District and the case closed. 

It will be observed that the greater portion of this transaction arose 
prior to 1874, and that the work was all done some time before 1878. 
Under the head of item No. 2 of this title your committee takes the 
position that all of these assets prior to 1878, even if uncollected, were 
to go to the District under the provisions of the organic act. This 
case apparently falls in that category. 

8. Section 7 of the act of May 18, 1916, provides for an appropria¬ 
tion of $25,000 for the repair and maintenance of the old Aqueduct 
Bridge until the bridge, provided for in this same act, should be com- 


16 FISCAL EELATTOKS BETWEEN U. S. AND DISTEICT OF COLUMBIA. 


pleted. This money for such repair and maintenance was appro¬ 
priated solely out of Federal funds. 

In the preceding six sections of the chapter detailed reference is 
made to the erection of the new bridge, and what was appropriated 
in these section was to be apportioned on the 50-50 basis. The 
amount appropriated to begin construction was $250,000 and the 
amount authorized $1,000,000. 

It seems evident to your committee that the Congress clearly 
intended that the amount of $25,000 for repair and maintenance was 
to be paid by the United States. 

9. The reclamation of that portion of Potomac Park on which the 
speedway has been built has also been brought to the attention of 
your committee. This reclamation project extended over a period 
of years and was, of course, directly under the control of War Depart¬ 
ment engineers. It was paid for by the Federal Government, 
although the District shared proportionately in the building and 
maintenance of the improvements constructed thereon such as the 
speedway itself. 

Concerning the primary purpose or original object of this reclama¬ 
tion project there may be some question. One leading reason which 
has been assigned is the improvement of navigation in the Potomac 
River, while sanitation may also have had something to do with the 
matter. After consideration of the facts as disclosed, your committee 
does not believe that it was the intention to call upon the District to 
share in this expense or that any proportion of same should be charged 
at this time. However, it was deemed proper to make reference to 
the matter in this report for the information of the Congress. 

Title V.—Moral Liability and Interest. 

In making its findings and recommendations, moral as well as 
legal obligations have been taken into consideration by the committee, 
pursuant to the instructions of the act of June 29, 1922. The ques¬ 
tion of moral obligations has given its members some concern, as 
the language may conceivably be consfrtied to cover an extremely 
wide field. In this, as in oilier matters, the scope of the committee’s 
authority and duty is so broad under the terms of the act that its 
members felt impelled to submit the question to its legal adviser, 
and the representative of the United States, Mr. Galloway, who 
rendered an opinion which is here quoted in part: 

It happens that in this investigation practically all of the questions upon which it 
is contended a moral obligation should be predicated, as shown either by the report 
of your accountants or as suggested to your committee from other sources, are matters 
upon which Congress has by specific legislation provided or plainly pointed out the 
manner in which they intended that the certain expenditures therein provided for 
should be paid. This would seem to settle the question from a legal standpoint, even 
though there was prior legislation indicating a contrary intent upon the part of Congress, 
because the familiar rule is that the last legislation must control. Therefore, the 
moral question involved would amount to little else than a determination by your 
committee as to whether or not Congress acted wisely when it enacted the specific 
legislation which is in question. In considering this question it is my opinion that 
you should closely question all suggestions that Congress in enacting certain legislation 
overlooked any facts or legislation upon the same subject and that you should not 
rely upon such suggestions until they are conclusively proven to you, but, on the 
contrary, you should indulge to a great extent in the presumption that Congress 
acted wisely with all of the facts before it and after giving all of them due consider- 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 17 

ation and weight, and especially that Congress acted with a full knowledge of all 
prior legislation. While, of course, these considerations would not affect the right or 
wrong of the question in its inception, certainly they should have some bearing upon 
the equities of the question as it now exists in view of the fact that the legislative 
body has once passed upon such question and that both of the parties to the con¬ 
troversy have long continued their activities in their reliance upon the settlement as 
therein provided. 

The application of the above rules would seem to remove from your consideration 
practically all of the moral questions except those wherein rather flagrant injustices 
appear to exist, and upon such questions as those it is my opinion that it is your duty 
to report to Congress with recommendations. 

Your committee has had in mind the above opinion, to which it is 
bound to give most serious consideration, and believes that it con¬ 
tains a proper application of general principles to the particular case 
in hand. 

There remains the question of interest. The language of the act 
of June 29, 1922, is quite specific and reads: 

And in event any money may be, or at any time has been, by Congress or othermse, 
found due, either legally or morally, from the one to the other, on account of loans, 
advancements, or improvements made, upon which interest has not been paid by 
either to the other, then such sums as have been or may be found due from one to the 
other, shall be considered as bearing interest at the rate of 3 per cent per annum from 
the time when the principal should, either legally or morally, have been paid, until 
actually paid. 

Thus it is made a part of the duty of this committee to calculate 
interest at 3 per cent per annum on the sums concerning which 
readjustment is recommended in Title III of this report, and to 
report the amount thereof to the Congress. This has been done, 
and a detailed statement of such interest calculations may be found 
in part 2 of this report. It is assumed that interest should be 
figured on annual and not daily balances, as the latter would be a 
practically impossible task. 

It is also the duty of your committee, under the act, to calculate 
interest at the same rate on any sums which have heretofore been 
found due by the Congress, at any time since 1874, from one gov¬ 
ernment to the other. As set forth under Title II of this report, all 
such sums on \^hich a settlement has been made, with or without 
payment of interest, consist of reimbursements by the District to 
the Federal Government. 

Items are expressly excluded, by the language of the act, on which 
interest has already been paid, irrespective of the rate. Such an 
item would be the one for moneys advanced by the United States 
to the District for extraordinary improvements between 1902 and 
1910. In this case, as hereinbefore set forth, the Congress not only 
required the payment of the principal, $4,144,696.35, but also interest 
at 2 per cent, which amounted to $586,702.83. 

Between the years 1910 and 1920 the United States was appar¬ 
ently quite active in securing reimbursement from the District on 
account of advances made by the Federal Government, or for other 
reasons. In addition to the above item of $4,144,696.35 and in¬ 
terest, at least 14 distinct items were collected, their total being 
$2,814,947.76. On most of this amount interest was never paid, 
and it is now proposed that such obligations, long since settled, 
shall be resurrected for the purpose of calculating and charging 
interest. This, at any rate, was the contention of Congressman 
Johnson of Kentucky before your committee, and the language of 


18 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


the act would appear to bear out that construction. Your com¬ 
mittee had no alternative but to prepare such tables, and has acted 
accordingly. 

It will be observed that three of the items in question, enumerated 
in part 2 of this report, in the principal sum of $125,865, on which it 
is now advocated by some that interest be collected, date prior to 
1878, being for general expenses and the construction and mainte¬ 
nance of schools, while the majority of the others run through a 
period of years but have their inception prior to 1880. 

Attention is also called to the fact that in the case of ^Reimburse¬ 
ment account of Washington Market Co. rentals, 1878 to 1914, 
$158,437.50,^' the act in question, that of March 4, 1915, contained 
the expression ‘Ruch sum being in full settlement of the amount due 
the United States for said market rentals." 

Two other items should be noted, both headed ‘^Reimbursement 
account of support of insane in St. Elizabeths Hospital," and being 
for $719,536.07 and $282,754.26, respectively. In the case of the 
latter item, the language of the act is as follows: “To further reim¬ 
burse the United States and in full." More than this, the accountant 
calculated interest and included it in his report; yet no interest was 
charged. What could be clearer than this to show that the Federal 
Government deliberately intended to waive and did waive any claim 
to interest ? 

This entire statement, as well as the others appearing in part 2 of 
this report, should be carefully examined by Members of the Congress. 

While the Congress has, of course, extensive powers with relation 
to the District of Columbia, it is our firm conviction that the collec¬ 
tion of interest on these paid-up accounts, particularly when it is 
specified that settlement is “in full" or “in full settlement," can not 
be supported, either on legal or equitable principles. In this connec¬ 
tion the views of Mr. E.F. Colladay, of the Citizens’ Joint Committee, 
as expressed in the hearings, are quoted below: 

I would like to present just a few words by way of quotation from volume 15 of 
Ruling Case Law, which I believe is the best compendium of American law extant. 

I read from page 1.3 on the subject of interest as incident to or separable from the 
principal debt [reading]: 

“The right to recover interest after the payment of the principal sum due depends 
upon whether the interest is due by the terms of the contract or whether it is merely 
implied and allowed by way of damages in an action for the principal. 

“If interest is due by the terms of the contract, the payment of the principal is 
no bar to its subsequent recovery, but if it is not due by the terms of the contract 
the payment of the principal sum is a bar to recovery. 

“The reason for the rule is that interest being a mere incident to the debt can not 
exist without it, and the debt being extinguished, the interest must necessarily be 
extinguished also.” 

The relation between the District of Columbia and the Federal Government is 
such that the District of Columbia can only act as Congress acts for it, in the matter 
of payments or demands. Congress has acted in the matter of requiring the District 
of Columbia to pay back certain items. In one instance Congress required 2 per 
cent interest on an item, and the interest was paid, with the item. 

In other instances Congress required the payment of principal without requiring 
the payment of interest. There was no contract obligation nor statute obligation 
to take the place of the contract obligation prescribing interest. There was no in¬ 
terest separate and distinct from the principal obligation. 

Your committee recommends that in all such cases where the Con¬ 
gress has acted and enforced collections of the principal sum, such 
action should be treated as final, and no interest whatever be charged 
at this time. 


IISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 19 

As to the other matters coDcerning which adjustment is recom¬ 
mended in this report, your committee takes the same view, though 
for different reasons. The argument has been made with much force 
that if the United States has on hand money belonging to the District 
it should be considered a demand deposit, which would not be due 
until demand is made in accordance with the law. Legally, there¬ 
fore, interest could not he charged prior to such demand. Taking 
this view of the matter it would, of course, be inequitable to make 
interest charges against the District government, if interest was not 
collected when the balance was in the District’s favor. 

Furthermore, if equitable principles be held to apply, the doctrine 
of dilatory creditor could certainly be urged against the United 
States in any attempt to collect interest from the District of Columbia, 
even though time limitations may not run against the Federal 
Government. 

Legal and equitable considerations so far as they may be held to 
apply to the peculiar relationship existing between these two govern¬ 
ments, cause this committee to recommend that in making any settle¬ 
ment upon the basis of facts disclosed in this report, no interest 
should be held to be due from the one government to the other. 

Title VI.—Conclusion. 

Before concluding part 1 of its report, your committee wishes to 
call attention to part 2 thereof. This contains, as required under the 
provisions of the act by which the committee was created, a state¬ 
ment of the sums which have been expended by the LTnited States and 
the District of Columbia, respectively, from July 1, 1874, to June 30, 
1922, inclusive, for the purposes enumerated, as ascertained through 
the authorized inquiry into all matters pertaining to the fiscal rela¬ 
tions between the two governments. In our opinion, the statement 
in question shows clearly, for the purposes required, the relative 
participation or contributions by the United States and the District. 

Part 2 also contains the interest tables called for by the act of 
June 29, 1922. Among other valuable matters can be found in part 2 
a statement of estimates submitted by the District Commissioners for 
the past 10 fiscal years, together with the amounts actually allocated 
in the annual District appropriation bills. It will be noted that the 
estimates total $172,117,932.63, and the appropriations $147,089,- 
156.08. One-half of the difference of $25,028,776.55 (or $12,514,- 
388.27) may be contrasted with the total amount of the free surplus 
now under consideration, namely, $4,671,196.97. 

It is believed that from the foregoing statements made by your 
committee a clear understanding of the situation, as revealed by its 
investigation, may be secured, and confirmation of same may be found 
in the documents which have been ordered to be printed. Among 
these documents are: The reports of Messrs. Haskins & Sells, con¬ 
taining tabulations; of Messrs. Galloway, Taggart, Donovan, Hodg¬ 
son, and the citizens’ joint committee; also your committee’s hear¬ 
ings and other papers. 

To summarize: Your committee recommends that the Senate and 
House of Representatives recognize the existence of a free surplus in 
the United States Treasury to the credit of the District of Columbia, 
as of June 30, 1922, in the sum of $4,671,196.97; that there shall also 


20 FISCAL KELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA, 


be credited (to correct certain errors in stating the account between 
the two governments) the sum of $665.46, a total of $4,671,862.43. 
That from these amounts should be deducted the following: 


The District’s proportion of the $240 bonus paid to its employees. $191, 890. 35 

The District’s proportion of cost of additional land for the National 

Zoological Park... 41, 500. 00 

One-half of amount appropriated by special act for relief of Eldred C. 

Davis. 317. 16 


Total. 233, 707. 51 


Net balance... 4,438,154.92 


That the net balance of $4,438,154.92 shall be held to be in the 
Treasury of the United States, subject to appropriation by the Con¬ 
gress, as a part of the District’s share of the expenses of maintaining 
its government, in accordance with the law. 

In connection with the items on which reimbursement has already 
been required by the Federal Government, and the items on which 
adjustment is recommended in this report, your committee recom¬ 
mends that no interest charges shall be made, either against the 
District of Columbia or the United States. 

Your committee reports that the investigations which have been 
made into fiscal relations between the two governments are as full 
and complete for all practical purposes as can ever be secured and 
recommends action by the present Congress that will definitely and 
finally set at rest existing contentions and conflicts between the Dis¬ 
trict and Federal Governments. 

« From an accounting and bookkeeping standpoint, and giving due 
consideration and weight to the organic law of 1878, as well as other 
laws passed by Congress from time to time, and the rulings of the 
Comptroller of the Treasury, we believe this report to all practical' 
purposes reflects the fiscal relations between the United States and 
the District of Columbia and shows the surpWs to the credit of the 
_^J ^istrict in tlm Treasury of the United Sta te&r^ome members of the 
committee believe thaUtlie^se’laws, although binding, were in many 
instances more favorable to the District than they should have been 
if due consideration had been given to the taxpayers of the United 
I States, and that under these laws the United States has fdUa long 
j time and is now contributing more than its just proportion to the 
j administration of the-District goverimient and the upkeep of the 
= District, and that this is especially true when consideration is given 
j to the limited activities and interests of~the United States in the Dis- 
’ trict, which are not y^olly maintained at the expense of the United 
States, as compared to'the large, expansive, and growing interests of 
* the residents of the D^trict or those owning property therein, and 
; taking into consideration also the low tax rate paid on property 
; located in the District. — 

I Respectfully submitted. 

Lawrence C. Phipps, 

L. Heisler Ball, 

Wm. j. Harris, 

Guy U. Hardy, 

; William C. Wright, 

Committee. 












PART II. 

The District of Columbia. 


Expenditures by the United States and the District of Columbia, 1874 to 1922, inclusive. 



United States. 

District. 

J874 to June 30, 1878, as furnished by the auditor of the District. 

Fiscal years 1879 to 1911, inclusive, from the report of T. Scott Mayes and 
J. R. Mayes.. 

$3,427,477. 27 

111,110,030.08 

74,326,258.17 
345,102. .52 
634.33 

189,209,502.37 

$8,902,044.33 

117,177,292. 84 

93,993,465. 64 

Fiscal years 1912 to 1922, inclusive, from the report of Haskins & Sells, 
certified pubhc accountants. 

Increased compensation paid by the United States. 

Relief of Eldred C. Davis.... 


Total. 

220,072,802. 81 



Approximate simple interest at 3 per cent per annum on advances, reimbursements, credit 
., balances, in qeneral fund, etc., computed in accordance with the requirements of the act 
^ 'of June 29, 1922. 

DEBITS. 


Amount of interest. 


Advance to defray District expenses of fiscal year 1878, $75,000; 1878 

to 1919, inclusive. $94, 500.00 

Advance for support of public schools, $75,000; 1878 to 1919, inclusive. 94, 500.00 
Advance to construct and equip school building in Georgetown, $50,865; 

1875 to 1919, inclusive. 68, 667. 75 

Advance to pay interest on 3.65 bonds, 1877-78, $586,067.23; 1878 to 

1914, inclusive. 632, 952. 61 

Washington Market rentals, 1878 to 1914, $158,437.50.;. 51, 975.00 

Freedman’s Hospital, 1906 to 1913, $37,996.70 .. 6, 332. 05 

Support of insane at St. Elizabeths Hospital, $719,536.07 and $282,- 
754.26 interest as computed by J. R. Mayes in his report to former 

congressional committee. 203, 770.01 

Supreme Court fines, 1878 to 1908, $24,300.76. 19, 636. 62 

Police court fines, 1878 to 1902, $211,450.12. 174, 907. 72 

Construction and equipment. District Jail, $125,000, June 25, 1866, 

reimbursed in 1919.:. 202, 500.00 

Advance, pay of teachers of public schools, 1874, $97,740.50; 1874 to 

1918, inclusive.-. 131, 949. 68 

Relief of Eldred C. Davis, $317.17, 1898 to 1922, inclusive. 237. 88 

National Zoological Park: 

$40,000, 1921 to 1922, inclusive. 2, 400.00 

$1,500,1922..... 45.00 

Increased compensation—bonus, $191,890.35, paid in fiscal years 1918 
to 1922, inclusive. 7, 515.01 


Total debit interest 


1, 691, 889.33 


CREDITS. 

Errors in stating account: 

$49.60, fiscal year 1917; 1917 to 1922, inclusive. 8.93 

$215.86, fiscal year 1920; 1920 to 1922, inclusive. 19.43 

$400, fiscal year 1922. 

Credit balances in general fund: 

$68,300.24, beginning fiscal year 1915. 2, 049.01 

$731,786.74, beginning fiscal year 1916. 21, 953. 60 

$2,664,717.77, beginning fiscal year 1917. 79, 941.53 

$4,056,547.40, beginning fiscal year 1918. 121, 696.42 

$6,053,634.98, beginning fiscal year 1919. 181, 609. 05 

.$7,142,189.70, beginning fiscal year 1920. 214, 265. 69 

$7,376,244.49, beginning fiscal year 1921. 221, 287. 33 

$7,573,235.84, beginning fiscal year 1922. 227,197.08 


Total credit interest 


1,070, 028.07 
21 


















































22 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Stofement shoivmg total of -estimates of appropriations for the District of Columbia, 
submitted by the Commissioners of the District, for each fiscal year beginning with 1912 
and ending with 1922; and the appropriation granted for each of said years as contained 
m the regular District of Columbia appropriation acts. 


Fiscal year. 

Estimates. 

Appropriations- 

1912. 

$12,741,450.90 
12, 818,93.5. .50 
12,739,737. 60 
14,354, 7.54. 49 
12,771,0.54.23 
15,343,196. 34 
16,278,092.66 
17,091,029.99 
15,781,2.59.90 
18,242,006.03 
23,956,414. 99 

$10,524,096. 50 
10, .550,998. 50 
11,257,054.00 
12,042,825.06 
11,734, 429.45 
12, .581,117. 20 
13,548, .567. 85 
14,234,138. 66 
14,613,211.00 
17,436,654. 87 
18,566,062.99 

1913. 

1914. 

1915. 

1916. 

1917. 

1918. 

1919. 

1920. 

1921. 

1922. 

Excess of estimates submitted by the commissioners over annual appro¬ 
priations granted on the basis of such estimates. 

172,117,932.63 

147,089,1.56.08 


25,028,776. 55 




Note. —The foregoing figures do not include estimates submitted by Federal arithorities, nor appropria¬ 
tions based on such estimates. Beginning with the fiscal year 1923, all appropriations of whatsoever 
character, chargeable in any part to the District, are included" in the District appropriation act. Prior to 
the current year appropriations under the jurisdiction and control of Federal agencies were carried in the 
sundry civil and legislative appropriation acts. Neither are any deficiency appropriations included 
The statement as submitted, therefore, merely presents the actual annual estimates prepared by and 
approved by the commissioners, and the action of Congress in granting appropriations based thereupon- 


STATEMENT SHOWING REIMBURSEMENTS MADE TO THE UNITED STATES FROM THE 
REVENUES OF THE DISTRICT OF COLUMBIA BETWEEN 1910 AND 1920. 

1 

For moneys advanced by the United States to the District of Columliia 


for extraordinary improvements between 1902 and 1910.$4,144, 696. 35 

For interest at 2 per cent on above advances. 586, 702. 83 

(Note,^— -The above indebtedness, both principal and interest, liq¬ 
uidated in full between 1910 and 1916.) 

Reimbursement under section 8 of District of Columbia act for 1920 
(reimbursed in 1920). 75, 000. 00 


“That the sum of $75,000 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District of Columbia to the United States on account of the 
unpaid balance of the advances to defray District of Columbia 
expenses of the fiscal year 1878, as provided by section 17 of the act 
providing for the support of the District of Columbia for said fiscal 
year, approved Mar. 3, 1877; and said sum shall be transferred to 
the credit of the United States from the amount in the Treasury to 
the credit of the District of Columbia immediately upon the ap¬ 
proval of this act.” (District of Columbia appropriation act for 
1920, approved July 11, 1919, sec. 8.) 

Reimbursement under section 9 of the District of Columbia act for 1920 

(reimbursed in 1920). 75, 000. 00‘ 

“That the sum of $75,000 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United 
States to the credit of the District of Columbia to pay the indebt¬ 
edness of the District of Columbua to the United States on ac¬ 
count of advances for the support of public schools of the District 
of Columbia, as provided by a clause of the sundry civil appro¬ 
priation act approved Mar. 3, 1877; and said sum shall be trans¬ 
ferred to the ( rodit (-f the United States from the amount in the 
Treasury to the credit of the District of Columbia immediately 
upon the approval of this act.” (District of Columbia appropria¬ 
tion act for 1920, approved July 11, 1919, sec. 9.) 

Reimbursement under section 10 of District of Columbia act for 1920 

(reimbursed in 1920). 50, 866. 00 

“That the sum of $50,865 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United 
































FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 23 


States to the credit of the District of Columbia to pay the indebt¬ 
edness of the District of Columbia to the United States on ac¬ 
count of advances to defray the expenses of constructing and 
equipping a school building in Georgetown, District of Columbia, 
as provided in the act approved Mar. 3, 1875; and said sum shall 
be transferred to the credit of the United States from the amount 
in the Treasury to the credit of the District of Columbia imme¬ 
diately upon the approval of this act.” (District of Columbia ap¬ 
propriation act for 1920, approved July 11, 1919, sec. 10.) 

Reimbursement for interest on 3.65 District of Columbia bonds for 

1877 and 1878 (reimbursed in 1915)... 

“The Secretary of the Treasury, through the accounting officers 
of the Treasury, is authorized and directed to charge to the District 
of Columbia the sum of $586,067.23, as a debt due the United States 
from the District of Columbia on account of money advanced by the 
United States to the District of Columbia with which to pay the in¬ 
terest on the 3.65 bonds of the District of Columbia for the fiscal 
years 1877 and 1878, and in stating the account between the United 
States and the District of Columbia the accounting officers of the 
Treasury and the accounting officers of the District of Columbia shall 
charge the District of Columbia with said sum; and the said sum of 
$586,067.23 must be paid to the United States by the District of Co¬ 
lumbia on or before June 30,1915, out of the revenues of the District 
of Columbia derived from privileges and from taxation upon the tax¬ 
able property in the District of Columbia.” (Deficiency act ap¬ 
proved Mar. 4, 1915.) 

Reimbursement account of Washington Market Co., rentals 1878 to 

1914 (reimbursed in 1915).. 

“Washington Market Co., rentals: For amount due the United 
States from the District of Columbia for collections made on account 
of the franchise rental of the Washington Market Co., fiscal years 
1879 to 1914, inclusive, there shall be transferred from the revenues 
of the District of Columbia to the United States the sum of $158,437.50 
such sum being in full settlement of the amount due the United 
States for said market rentals under the decision of the Comptroller 
of the Treasury, December 2, 1914, and to be covered into the Treas¬ 
ury as miscellaneous receipts.” (Deficiency act approved Mar. 4, 
1915.) 

Reimbursement account of Freedman’s Hospital, 1906 to 1913 (reim¬ 
bursed in 1915). 

“To reimburse the United States the amount due on account ot 
one-half of the per capita cost of maintenance of indigent patients in 
Freedman’s Hospital from the District of Columbia in excess of the 
number charged to and paid for by said District during the fiscal 
years 1906 to 1913, inclusive, there shall be transferred from the reve¬ 
nues of the District of Columbia to the United States, beginning with 
the fiscal year 1915, the sum of $37,996.70, which amounts so trans¬ 
ferred shall be covered into the Treasury as miscellaneous receipts.” 
(Sundry civil act Aug. 1, 1914.) 

Reimbursement account of support of insane in St. Elizabeths Hos¬ 
pital, 1881 to 1911 (reimbursed in 1913 and 1914)... 

“The reimbursement required to be made to the United States by 
the District of Columbia under the provisions of the sundry civil 
appropriation act approved Aug. 24,1912, on account of deficiencies in 
in payments for the care and maintenance of the insane of said Dis¬ 
trict during the fiscal years 1881 to 1911, inclusive, is hereby fixed 
at $719,536.09.” (District of Columbia appropriation act for the 
fiscal year 1914, approved Mar. 4, 1913.) 

Reimbursement account of support of insane in St. Elizabeths Hos¬ 
pital (reimbursed in 1917). 

“To further reimburse the United States, and in full, the amount 
due on account of one-half of the per capita cost of maintenance of 
indigent patients in the Government Hospital for the Insane from 
the District of Columbia in excess of the number charged to and paid 
for by said District during the fiscal years 1879 to 1912, inclusive, 
there shall be transferred from the revenues of the District of Co¬ 
lumbia to the United States the sum of $282,754.26. ” (Sundry civil 

act approved July 1, 1916.) 


$586,067.23 


158,437.50 


37,996.70 


719, 536. 07 


282, 754. 26 







24 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Reimbursement on account of fines in United States cases in criminal 
division of the Supreme Court, of the District of Columbia, between 

July 1, 1878 and Sept. 30,1908 (reimbursed in 1917)... - - 

“Court fines: The sum of $24,300.76, representing fines in United 
States cases collected on judgments of the criminal division of the 
Supreme Court of the District of Columbia, during the period from 
July 1, 1878 to Sept. 30, 1908, inclusive, and deposited in the Treas¬ 
ury of the United States to the credit of the District of Columbia, 
shall be transferred from the credit of the District of Columbia to the 
United States.” (Deficiency act approved Apr. 17, 1917.) 

Reimbursement on account of fines in United States branch of Police 
Department between July 1, 1878 and Jan. 1, 1902 (reimbursed in 

1917).^. 

“The sum of $211,450.12, representing fines in United States cases 
collected on judgments of the police court of the District of Colum¬ 
bia, during the period from July 1, 1878 to Jan. 1, 1902, inclusive, 
and deposited in the Treasury of the United States to the credit of 
the District of Columbia, shall be transferred from the credit of the 
District of Columbia to the United States.” (Deficiency act ap¬ 
proved Apr. 17, 1917.) 

Reimbursement under section 7 of the District of Columbia act for 
1919, on account of the construction and equipment of the District 

jail (reimbursed in 1919). 

“That the sum of $125,000 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District of Columbia to the United States on account of the con¬ 
struction and equipment of the District jail, as provided in section 
1097 of the Revised Statutes of the District of Columbia.” (District 
of Columbia appropriation act for the fiscal year 1919 approved Aug. 
31, 1918.) 

Reimbursement under section 8 of the District of Columbia act for 
1919, on account of advances to pay teachers in the District public 

schools in 1874 (reimbursed in 1919). 

“That the sum of $97,740.50 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District of Columbia to the United States on account of advances 
to ])ay teachers in the District public schools, as provided by the act 
entitled ‘An act making appropriation for the payment of teachers 
in the public schools of the District of Columbia, and providing for 
the levy of a tax to reimburse the same,' approved April 18, 1974.” 
(District of Columbia appropriation act for the fiscal year 1919 ap¬ 
proved Aug. 31, 1918.) 

Reimbursement account of Maryland School for Blind, 1899 to 1906 
(with interest at 2 per cent, $1,184.81; reimbursed in 1907; interest 
paid United States in 1907). 

Reimbursement, account of Meridian Hill Park and Montrose Park 
(principal and interest at 3 per cent, $12,952.15) reimbursed in 1912, 
1913, 1914, and 1915 in four equal annual installments. 


$24, 300. 76 


211, 450.12 


125, 000. UC 


97, 740. 50 


52, 973. 64 
317, 825. 98 


Total 


7, 546, 346. 94 










PRELIMINARY REPORT OF HASKINS & SELLS. 


Baltimore, November 20, 1922. 

Hon. Lawrence ('. Phipps, 

Chairman Joint Select Congressional Committee, 

United States Senate Building. 

Dear Sir: In connection with our engagement comprehending the examination of 
the fiscal relations between the United States of America and the District of Columbia, 
for the period from July 1, 1911, to June 30, 1922, we desire to formally acquaint your 
committee with the status of the work and with certain conditions that have come to 
our attention during the progress of the work. 

We have prepared analyses of the receipts and disbursements for the 11 fiscal years 
ended June 30, 1922. There is now in progress an examination of the receipts for the 
purpose of determining that they are the same as shown at the source and that they 
have been properly credited or apportioned to the United States and to the District 
according to law, and an examination of the disbursements for the purpose of deter¬ 
mining that they, and the separation of them between the United States and the 
District, are in agreement Avith the numerous acts of Congress. It is estimated that 
approximately three weeks will be required to complete this work. 

Certain acts of Congress require that the surplus fees of the offices of the register of 
wills and the recorder of deeds be covered into the Treasury of the United States. 
We found that the accounting systems of neither of these offices were sufficient to 
disclose what the surplus fees were and that the amounts covered into the Treasury at 
the end of each fiscal year by these offices were in reality the excess of receipts over 
disbursements. At the office of the register of wills we made an analysis of the cash 
transactions for the fiscal year ended June 30, 1922, and arrived at an approximate 
deficit of $1,341.96. The amount covered into the Treasury at the end of this fiscal 
year was $165.52, but the office had a liability for refundable deposits and unearned 
fees of $2,371.10, of which $1,507.48 was applicable to the fiscal year ended June 30, 
1922. No record is maintained by the office of its liability for refundable deposits 
and unearned fees or of uncollected fees. 

At our request, the register had prepared from his files a statement of fees uncollected 
at June 30, 1922. This statement shows that the uncollected fees aggregate $12,032.75, 
and that they have accrued since the year 1909. The total amount covered into the 
Treasury as surplus fees for the fiscal years ended June 30, 1900, to 1922, inclusive, 
have aggregated $3,368.51. This latter amount, representing surplus fees covered 
into the Treasury during 23 fiscal years, is small in comparison with the amount of 
uncollected fees at June 30, 1922. 

An act of Congress provides that the expenditures of the office, including the com¬ 
pensation of employees, but not including compensation of the register, are to be 
regulated by the register, but the act further provides that any expenditures incurred 
by him shall not be a charge upon the Public Treasury. 

It was found that the receipts of the register’s office have increased year after year 
but that the ratio of salaries paid to the receipts of each year have been fairly con¬ 
stant. As an example, we find that the increase in receipts for the fiscal year ended 
June 30, 1922, ox'er the receipts for the fiscal year ended June 30, 1905, was 160.36 
per cent. The ratio of salaries to receipts in the fiscal year 1905 was 89.2 per cent 
and the ratio of salaries to receipts in the fiscal year 1922 was 93.9 per cent. At May 
15, 1922, the receipts of the office were insufficient for the maintenance of salaries 
at the amounts paid up to that time and the salaries were consequently reduced. 
The pay roll for the period ended on that date carries the notation “reductions of 
May 15, 1922, made owing to decrease in receipts of office—to be restored to original 
salaries when funds warrant same.” This decrease for the one-half month amounted 
to $173.07 and if this saving was carried along for one year the aggregate would be in 
excess of the total amount covered into the Treasury in 23 years as surplus fees. 

The register had on deposit at June 30, 1922, at the American National Bank of 
Wasliington $22,607.39, representing the cash residue of certain undistributed 
estates. This amount is $13.24 in excess of the aggregate amount due undistributed 
estates as shown by the records in the office. We are informed that this difference 

32894—S. Doc. 301, 67-4-3 25 



26 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


has existed for some time prior to the year 1914. On September 28, 1922, the Ameri¬ 
can National Bank of Washington allowed interest on this account to September 25, 
1922, at 2 per cent per annum, retroactive to the opening of the account on October 
13, 1919, amounting to $1,100.80. We suggested that the amount of $1,100.80 be not 
considered as an earning of the office but that a ruling be secured from the proper 
department as to its disposition. 

The register has in his custody certain property, other than cash, belonging to 
undistributed estates, consisting of a bond of the Virginian Railway Co., par value 
$100, United States of America war savings stamps of the principal amount of $15, 
and jewelry of an estimated value of $300, but maintains no record as to the estates 
of which this property is a residue. At our suggestion, the register has now installed 
a record comprehending the necessary information in connection with this property 
in his custody. 

The office of the recorder of deeds requires that all fees be collected in advance, 
and we found that such fees collected in advance on work not completed at June 30, 
1922, aggregated $45,094.35. No record of these fees collected in advance is main¬ 
tained by the office. Of the amount of $45,094.35, it is estimated that $22,790.70 
will be required to pay salaries to complete the work of copyists and for comparing 
subsequent to June 30, 1922. At October 14, 1922, the liability for salaries on the 
uncompleted work collected for in advance at June 30, 1922, was estimated at approxi¬ 
mately $12,223.36. 

The amount covered into the Treasury at June 30, 1922, as surplus fees for the 
fiscal year ended that date was $20,130.48. We made an analysis of the cash receipts 
and disbursements for the fiscal year ended June 30, 1922, and, after taking into 
consideration the office rent of $6,000 which is not paid from the fees of the office, 
we find that the deficit for that fiscal year was approximately $2,240.57. 

Other matters pertaining to the office of the recorder, including reference to the 
inadequacy of the floor space available for the transaction of business and the storing 
of its important records, will be covered by our final report. 

At the office of the collector of taxes for the District of Columbia it was found that 
the taxes shown on the collector’s report as uncollected at June 30, 1922, were as 
follows: 

Realty taxes, 1877-1922. $2, 034, 533. 23 

Special reimbursable taxes (all open items). 12, 858. 97 

Personal taxes: 

Tangible, 1903-1922. $1, 268, 346. 02 

Intangible, 1918-1922. 204, 958. 41 

- 1,473,304.43 


Total. 3,520, 696. 63 

New ledgers are opened for each fiscal year covering the realty and personal taxes, 
and there were 28 such ledgers for the fiscal year ended June 30, 1922. We are in¬ 
formed that trial balances of these ledgers, or of the ledgers for prior fiscal years, to 
determine if the aggregates of the open items w’^ere in agreement with the amounts 
carried by the collector as outstanding, were never prepared. Time is not available 
for us to prepare these trial balances, but we have directed the attention of the auditor 
of the District and the collector to the desirability of preparing such trial balances. 
As one ledger comprehended the uncollected special reimbursable taxes we prepared 
a trial balance thereof as of June 30, 1922, and developed the fact that the aggregate 
of the balances of the detail accounts was $802.05 less than the amount carried as 
uncollected in the collector’s report at that date. The question of expenditures 
from appropriations resulting in these special reimbursable taxes and their subse¬ 
quent collection and covering into the Treasury is receiving our consideration. 

The checking of the collector’s office by the auditor apparently has been limited 
to comparison of the cash receipts with the duplicate tax coupons representing taxes 
collected and the subsequent checking of the postings of these duplicate tax coupons 
to the ledger accounts. In the case of personal taxes it was found that the checking 
of the postings of the duplicate tax coupons was about two years in arrears, but an 
effort is now being made to bring this work up to date. The transactions relating to 
water main tax assessments and special assessments and the outstanding balances of 
such assessments are not included in the reports of the auditor or the collector. The 
ledgers in the collector’s office covering water main taxes show $103,368.13 outstanding 
June 30, 1922, while the ledger in the auditor’s office shows $107,776.39 outstanding 
at the same date. This discrepancy can be accounted for principally, we are 
informed, by the failure of the auditor to receive from the water main tax division 









FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 27 


the record of changes in assessments. We are informed that no trial balances of the 
detail accounts in the collector’s office have ever been prepared and owing to our 
limited time they have not been prepared by us. 

There are 12 ledgers containing the special assessments tax accounts for the year 
ended June 30, 1922, and the amount outstanding at June 30, 1922, as reflected by 
the ledger in the auditor’s office, was $49,453.44. We are informed that no trial 
balances of the detail items have ever been prepared and none was prepared by us. 
Our work in the offices of the auditor and the collector of taxes has not yet been com¬ 
pleted. 

At the oflice of the Treasurer of the United States in his capacity as ex-officio com¬ 
missioner of the sinking fund of the District of Columbia we were confronted with 
difficulties the solution of which required considerable time. The current general 
ledger shows 54 open accounts at June 30, 1922. The clerk in charge being unfamiliar 
with a majority of the accounts has for some time been separating them on his trial 
balances by showing 47 of the accounts as dormant and 7 as active. An account 
with a credit balance of 14 cents has remained untouched since the year 1882, and 
an account with a credit balance of 2 cents has remained inactive since the year 1879. 
Certain accounts show no change for the last 10 to 35 years. One active account 
styled “District of Columbia” has an accumulated debit balance of $18,507,704.55, 
while an account styled “Interest accumulations on stocks and bonds retired” has 
a credit balance of $18,731,335.15. No entries have been made in this latter account 
since July 1, 1914. Three accounts show balances brought forward from ledger 
No. 1, which ledger can not be located. The clerk in charge, and his immediate 
predecessor, have both stated to us their inability to explain certain entries in the 
ledgers made by them. 

In view of the fact that on August 1, 1924, all of the funded debt of the District of 
Columbia will have matured, and the necessity for the sinking fund office will no 
longer exist, we have felt it necessary to determine the liability of the District for 
the funded indebtedness outstanding in the hands of the public both as to principal 
and interest. 

Every effort has been and is now being made to reconcile the balance of cash on 
deposit with the amount reflected by the sinking fund ledger and the quarterly 
accounts current rendered to the General Accounting Office, State and other depart¬ 
ments division. As an illustration of the situation, we submit the following balances 
of cash as shown by the records as of June 30, 1922, in so far as they relate to the han¬ 
dling of the bonds popularly known as 3.65 per cent bonds: 


Deposit ledger. Treasurer’s office.$57, 607. 59 

Account current, June 30, 1922... 64, 671. 84 

Sinking fund ledger. 66, 952. 01 

As there was a transfer from the outgoing Treasurer to the present incumbent on May 
2, 1921, it was considered that the record of cash on deposit to the credit of the sinking 
fund office at that date, comprehended in the transfer, would give an accurate starting 
point for the final establishment of the amount of cash that should be on hand at June 
30, 1922. To this end we addressed a letter on September 19, 1922, to the Hon. Frank 
White, Treasurer of the United States of America, requesting the work papers in 
connection with the transfer of his office on May 2, 1921, and further requesting that 
he produce the ledger No. 1 hereinbefore mentioned. 

Under date of September 29, 1922, the Hon. S. P. Gilbert, jr.. Undersecretary, 
replied to our letter of September 19, quoting the securities held in the sinking fund 
office on May 2, 1921, certain information relative to the transfers on May 2, 1921, 
and November 5, 1912, and copies of certain papers in connection with the 1912 
transfer. Replying to this letter under date of October 3 we renewed our request for 
the work papers in connection with the transfer on May 2, 1921. Mr. Gilbert in 
replying under date of October 7, furnished certain additional information regard¬ 
ing the transfer on May 2,1921, and attached a statement of the Chief of the Division 
of Securities, office of the Treasurer of the United States, of the balances shown on 
the books of the Treasurer’s office as of April 30, 1921, as ex officio commissioner of 
the District of Columbia sinking-fund. Under date of October 14, in replying to Mr. 
Gilbert’s letter of October 7, we called his attention to certain discrepancies between 
the statements accompanying his letters of September 29 and October 7 and the 
accounts shown on the sinking-fund ledger, and again renewed our request for the 
work papers comprehending the transfer on May 2, 1921, and further requesting that 
he designate some one responsible for the transfer to assist us in their interpretation. 
Under date of October 21, Mr. Gilbert advised us that, in compliance with our request, 
Mr W. 0. Woods of his department had been designated to examine the accounts in 





28 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


the Treasurer’s office and that he would communicate with us in order that necessary 
steps could be taken to cooperate with us. Up to this time the work papers in connec¬ 
tion with the transfer on May 2, 1921, have not been made available to us. Several 
days after the receipt of Mr. Gilbert’s letter of October 21, Mr. Woods communicated 
with us and since that time has been making a separate examination of the books and 
accounts of the sinking-fund office. We find that an accountant connected with the 
United States Bureau of Efficiency has also been designated by some one to make an 
examination of the office. Recently a clerk connected with the Treasurer’s office 
has been temporarily released from his ordinary duties and designated to assist Mr. 
Woods. We are without any information as to the length of time that will be required 
by these accountants to complete their work. All data compiled by us and other 
information in our possession has been made available to them. 

As the activities of the sinking fund office cover a period of 44 years considerable 
time is necessarily consumed in analyzing any particular account. 'We secured the 
annual reports of the sinking fund commissioner for the entire period involved and 
made a summary of his statements of cash receipts and disbursements. This summary 
developed the fact that, according to the reports, the disbursements exceeded the 
receipts by $104,579.50, notwithstanding the fact that the final report at June 30, 1922, 
disclosed an unexpended balance on hand of $45,965.62. We allocated this discrep¬ 
ancy to the fiscal years 1908, 1913, 1916, and 1917, and found that it was occasioned by 
bringing forward to subsequent reports balances not in agreement with those shown in 
preceding reports. We handled this matter with the clerk responsible for the prepa¬ 
ration of the reports for the fiscal years 1916 and 1917, and he has stated that he could 
give us an explanation only after a careful examination of the books and records. 

The report of the sinking fund commissioner for the fiscal year ended June 30, 1922, 
shows that $10,280,300, par value, of the 3.65 per cent bonds have been retired and 
that $4,719,700, par value, of these bonds are outstanding. The amount of bonds 
shown as outstanding is in agreement with the advice received from the Division of 
Loans and Currency. The Register of the Treasury advises us that his record shows 
a par value of $7,299,800 returned to his office for retirement. Up to this time we have 
been unable to locate any record of coupons not presented for payment. The clerk in 
charge of the sinking fund records has furnished us with a statement showing that out¬ 
standing checks for interest on registered bonds aggregated $8,139.50 at June 30, 1922. 
The amount on deposit with the Treasurer of the United States available for interest 
payments is shown as $3,564.46. The records of the sinking fund office indicate 
that there are outstanding at June 30, 1922, stocks and bonds, with interest thereon 
accrued and unpaid at maturity, other than the 3.65 per cent bonds, but our investi¬ 
gation thus far does not permit of the definite establishment of this liability. 

The sinking fund ledger contains three open balances unchanged since June 30, 
1898, with ledger folios and titles as follows: 


Folio 709, fund advanced to increase water supply, debit.$1, 663. 89 

Folio 213, interest on fund to increase water supply, debit. 6. 53 


Folio 707, District of Columbia, account increasing water supply, credit.... 1, 670. 42 

No explanation of these accounts could be obtained. We prepared analyses of these 
accounts and developed the fact that the amount of $1,670.42 represents an excess 
reimbursement to the United States as follows: 

One-half of total amount advanced by the United States to increase 


the water supply of the city of AVashington. $1,196, 263. 32 

Interest on same.^. 257, 351. 53 

Total. 1,453,614.85 

Amount returned, unused. 33, 019. 07 

Remainder. 1, 420, 595. 78 

Amount reimbursed to the United States by the District of Columbia.. 1, 422, 266. 20 

Excess of reimbursement. 1, 670. 42 


The above will serve to illustrate the work which must be performed to finally 
explain the open accounts in the sinking-fund ledger. 

The records show that the funded debt of the District of Columbia outstanding at 
July 1, 1878, aggregated $22,106,650. Subsequently bonds of a par value of $3,892,300 
were issued to redeem some of the funded debt outstanding at July 1, 1878, and to 
reimburse the United States for advances made for the purpose of retiring certain 
funded debt. The records also show that $1,256,750 of the 3.65 per cent bonds were 













FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 29 


issued subsequent to July 1, 1878, to fund certain floating indebtedness of the District 
existing prior to July 1, 1878, but not finally established until a date subsequent 
thereto. Of the bonds issued subsequent to July 1. 1878, there was an issue of $1,- 
092,300, 20-year 5 per cent funding bonds, due July 1, 1899. The act of Congress 
authorizing this issue carried a provision that the act should not be construed to make 
the Government of the United States liable for either the principal or interest of said 
bonds, or any part thereof. The records show that this condition was ignored and 
that the United States has been charged proportionately for the redemption of the 
principal and for the interest payments. The records show that of this issue bonds 
of a par value of $281,500 were sold and the proceeds used to reimburse the United 
States for advances previously made to redeem certain old funded debt. By partici- 
patiiyg subsequently in the payments for the redemption of these $281,500 of bonds 
and in the int^^erest payments thereon the United States naturally participated in the 
cost to the District of the payment of its debt to the United States. The records 
show that in the redemption of the bonds of a par value of $1,092,300, an expenditure 
of $1,133,846.04 was required. 

We find tliat the acts authorizing the following funded debt outstanding at July 1, 
1878, carried provisions for the levying of taxes for the payment of principal and 
intert st: 


Permanent improvement, 6 per cent bonds, due Dec. 20, 1891. $3, 995, 000 

Twenty-year funding, 6 per cent bonds, due July 1, 1892. 1,500, 000 


Total.. 5,495,000 

The United States has participated through its proportional appropriations in the 
redemption and interest payments of these bonds. 

The record shows that at July 1, 1878, $14,943.73 was turned over to the Treasurer 
of the United States when he assumed the office of ex officio commissioner of the 
sinking fund of the District, it apparently being the only amount available at that 
time for the payment of interest and to apply on payments for the final redemption 
of a funded debt aggregating $22,106,650. 

The records indicate that the appropriations for interest and sinking-fund purposes 
during the period from July 1, 1878, to June 30, 1922, aggregated $49,051,767.42, and 
that from the proceeds of bonds sold the sinking fund received cash aggregating 
$4,712,520.53. 

The activities of the sinking-fund office, in addition to the handling of the funded 
debt of the District, comprehended transactions in connection with retents from 
District of Columbia contractors, payments of claims in connection with judgments 
rendered against the District by the Court of Claims, special taxes collected, funds 
for account of the Metropolitan police and firemen, and certain activities in connec¬ 
tion with the extension of water service in the District. 

The records show that in the redem])tion of bonds the following amounts were 
exj)ended in premiums up to the close of the fiscal year ended June 30, 1914: 

3.65 per cent bonds. $1, 026, 378. 96 

Other bonds. 369, 499. 94 


Total 


1, 395, 878. 90 


Although the United States by its proportional appropriations has participated in 
the payments for such of the funded and unfunded debt of the District existing at 
July 1,1878, as has since been retired, and has participated in the payments represent¬ 
ing the present investments of the sinking fund, apparently no consideration has been 
given to the asset of the District at that date consisting of uncollected taxes. The 
records indicate that subsequent to July 1, 1878. the District has collected and 
deposited to its credit in the general fund taxes due and uncollected at July 1, 1878, 
aggregating $1,434,597.67. 

In the course of our work it was noted that during the period from July 1, 1911, to 
June 30, 1922, the follpwing charges were made against the District on account of the 
adjustment of advances, interest on advances, and appropriations made by the United 
States prior to July 1, 1911: 


Fiscal year ended June 30— 


1920. $200,865.00 

1919. 222,740.50 

1917. 518,505.14 

1915. 868,655.42 

1914. 1,331,557.66 


luscal year ended June 30— 


1913. $1,419,830.99 

1912. 1,239,030.99 

Total. 5,801,185.70 




















30 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Certain old accounts with either,a debit or a credit balance open on the Treasury 
ledgers in which the District apparently is interested are summarized by years and 
amounts as follows; 


Year. 

Debit bal¬ 
ance. 

Credit bal¬ 
ance. 

1883. 


S440,353.43 

1884. 

$250,000.00 
75,000.00 
75,000. 00 
1,677.63 
5.00 
4.31 

1884. 


1884. 


1884. 


1884. 


1884. 





Year. 

Debit bal¬ 
ance. 

Credit bal¬ 
ance. 

1885. 

$54.69 
14.86 
20.31 
116,775.68 
5.00 


1885. 


1889. 


1897. 


1897. 


Total. 


518,557. 48 

$440,353. 43 



Pursuant to an act of Congress the two items of $75,000 each were charged to the 
District in the fiscal year ended June 30, 1920. We are unable at this time to explain 
to your committee why these two items still remain open on the Treasury ledgers or 
to give definite information relative to the other items. 

In conclusion, we wish to assure you of our readiness to appear before the committee 
whenever it may be con^'enient to you for discussion of this engagement. 

Yours very truly, 


Haskins A Sells. 













































REPORT OF HASKINS & SELLS. 


Baltimore, January 11, 1923. 

Hon, Lawrence C. Phipps, 

Chairman Joint Select Congressional Committee, 

United States Senate. 

Dear Sir: Pursuant to engagement, we have made an examination of the fiscal 
relations between the United States of America and the District of Columbia for the 
11 fiscal years ended June 30, 1912 to 1922, inclusive and report thereon as follows: 

GENERAL. 

The act of Congress, approved June 29, 1922, providing for the inquiry into the 
fiscal relations between the United States and the District of Columbia reads in part 
as follows: 

“A joint select committee, com^sed of three Senators to be appointed by the 
President of the Senate and three Kepresentatives to be appointed by the Speaker 
of the House of Representatives, is created and is authorized and directed to inquire 
into all matters pertaining to the fiscal relations between the District of Columbia and 
the United States since July 1, 1874, with a view of ascertaining and reporting to 
Congress what sums have been expended by the United States and by the District 
of Columbia, respectively, whether for the purpose of maintaining, upbuilding, or 
beautifying the said District or for the purpose of conducting its government or its 
governmental activities and agencies, or for the furnishing of conveniences, comforts, 
and necessities to the people of said District. Neither the cost of construction nor of 
maintenance of any building erected or owned by the United States for the purpose 
of transacting therein the business of the Government of the United States shall be 
considered by said committee. And in event any money may be, or at any time has 
been by Congi’ess or otherwise, found due, either legally or morally, from the one to 
the other, on account of loans, advancements, or improvements made, upon which 
interest has not been paid by either to the other, then such sums as have been or may 
be found due from one to the other, shall be considered as bearing interest at the rate 
of 3 per centum per annum from the time when the principal should, either legally or 
morally, have been paid, until actually paid. And the committee shall also ascertain 
and report what surplus, if any, the District of Columbia has to its credit on the books 
of the Treasury of the United States which has been acquired by taxation or from 
licenses.” 

Our instructions from your committee were that our examination was to be confined 
to the period from July 1, 1911, to June 30, 1922, but that any matters coming to our 
attention which had a bearing upon conditions pertinent to the inquiry, which 
existed during the period from July 1, 1874, to June 30, 1911, were to be communicated 
to your committee in our report. 

No consideration has been given by us to the computation of interest as provided for 
by the act of Congress creating your committee, as we understand that the question of 
interest will receive the attention of your committee after considering all facts devel¬ 
oped by its inquiry. 

Our examination has comprehended that fund to which is credited the collections of 
taxes, licenses, etc., accruing to the District, and to which is charged proportions of 
appropriations for the expenses of the District, as provided by the acts of Congress. 
This fund is designated as the “general fund.” 

The following described exhibit and schedules, attached hereto, contain a statement 
of this fund and details of the receipts and disbursements, by years and in total, for 
the 11 fiscal years ended June 30, 1912 to 1922, inclusive: 

Exhibit A.— The District of Columbia General Fund—Summary of Balances 

ON Deposit in the United States Treasury, Receipts, Disbursements, and 

Payments and Reimbursements to the United States. 

Schedule No. 1.—Statement of receipts from District of Columbia sources, for 
account of the District of Columbia and the United States. 

Schedule No. 2.—Statement of disbursements, charged proportionally to the Dis¬ 
trict of Columbia and the United States. 


31 


32 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


In the preparation of these statements we have not considered receipts and expenses 
applicable to the District which have not been included as such by the Treasury 
Department of the United States or the auditor of the District, certain open debit 
and credit balances carried on the ledgers of the Treasury Department in which the 
District is apparently interested, any asset or liability existing in connection with the 
accounts of the Treasurer of the LTnited States as ex-officio Commissioner of the Dis¬ 
trict of Columbia sinking fund, the outstanding accrued assets and liabilities of the 
District, nor certain collections deposited subsequent to June 30, 1922. Elsewhere 
in this report reference is made to items of this character. The credit balance of 
$7,574,4i().90, in the general fund as of June 30, 1922, as shown in Exhibit A, is in 
agreement with the amount shown on Certificate No. 12322, November 25, 1922, of the 
Comptroller General of the United States. This certificate reads as follows: 

Certificate No. 12322. 


GENEKAL ACCOUNTING OFFICE, STATE AND OTHER DEPARTMENTS DIVISION, THE DIS¬ 
TRICT OF COLUMBIA IN ACCOUNT WITH THE UNITED STATES, FOR THE FISCAL YEAR 
ENDED JUNE 30, 1922. 


Washington, D, C., November 25, 1922. 

I certify that I have examined and stated the account of the District of Columbia 
with the United States from July 1, 1921, to June 30, 1922, and find a balance of 
$8,136,574.44 due the District of Columbia, as follows: 

General fund. $7, 574, 416. 90 

Special funds. 250, 624. 55 

Trust funds. 311, 532. 99 


Total. 8,136,574.44 

(Care of Secretary of the Treasury, Division of Bookkeeping and Warrants.) 

J, R. McCarl, 
Comptroller General. 

. By W. S. Dewhirst. 

O. B. B. 

In the preparation of Exhibit A we have accepted the debit balance in the general 
fund at June 30, 1911, of $2,665,081.81, as shown by the stated account for the fiscal 
year ended that date, certificate No. 3968. This balance at the beginning of the 
period under review comprehends, in addition to the taxes, licenses, etc., collected 
and deposited, the credits obtained through the deposit of certain certificates com¬ 
monly termed “drawbacks.” An act of Congress approved June 27, 1879, provided 
for the issuance of these drawbacks in instances where the special improvement 
assessments prior to June 19, 1878, had been found to be excessive or erroneous and 
for the acceptance of such drawbacks in the payment of taxes. An act of Congress 
approved July 9, 1886, provided that 50 per cent of all such drawbacks theretofore 
or thereafter received in payment of general taxes should be considered as money 
and credited to the District. The records indicate that the credits received by the 
District on account of these drawbacks and the years in which deposited are as follows: 


Fiscal year deposited. 

Total 
value of 
certificates. 

Proportion 
credited to 
District’s 
general 
fund. 

Fiscal year deposited. 

Total 
value of 
certificates. 

Proportion 
credited to 
District’s 
general 
fund. 

1879-1882. 

$252,182.74 
5,138.65 
566.09 
101,131.37 
17,244.01 
1,308.29 
305.57 
28,156.36 
62,207.01 
54,909.21 
72,549.27 

$126,091.37 
2,569.32 
283.05 
50,565.68 
8,622.01 
654.14 
152.79 
14,078.18 
31,103.50 
27,454.61 
36,274.63 

1893. 

$83,683.93 
2,167.53 
2,150.92 
809.87 
17,673.90 
248.95 
295.75 
96.39 

$41,841.97 
1,083.76 
1,075.46 
404.94 
8,836.95 
124.47 
147.88 
48.19 

1883. 

1894. 

1884. 

1895. 

1885. 

1896. 

1886. 

1897. 

1887. 

1898. 

1888. 

1899. 

1889. 

1900. 

1890 . 

Total_ 

1891. 

702,825.81 

351,412.90 

1892. 
















































FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 38 


As these credits aggregating $351,412.90 were not available in the form of cash for 
the payment of the District’s proportion of expenses, it was necessary for the United 
States to pay in cash an equivalent amount in addition to its proportional appropria¬ 
tions, as the I nited States participated to the extent of 50 per cent in the general 
expenses of the District. 

The general ledger in the office of the auditor of the District shows a balance in the 
general fund at June 30, 1922, of $7,579,677.57, which is $5,260.67 in excess of the 
amount shown in Exhibit A and 1 cent less than that shown in the auditor’s report 
for the fiscal year ended June 30, 1922. The balance as carried by the United States 
General Accounting Office had not been reconciled with that shown by the general 
ledger in the office of the District auditor at the time of the completion of our exami¬ 
nation. Following is a reconcilement of the amount on deposit in the United States 
Treasury with the amount claimed by the District as free surplus, as compiled by the 
District auditor: 

Balance June 30, 1922, as per auditor’s report.$7, 579, 677. 58 

Less unexpended appropriations: 

$2,608,079.57, District proportion 60 per cent.$1, 564, 847. 74 

$373,133.73, District proportion 50 per cent. 186, 566. 87 

$326,201.63, District proportion entire. 326, 201. 63 

- 2,077,616.24 

Remainder. 5, 502,061.34 

Amount considered in one fiscal year for tax rate purposes and in 
another year for accounting purposes. 825, 603. 69 


Free surplus. 4, 676,457. 65 

Free surplus as shown by auditor’s report. 4, 677,347. 90 


Unlocated difference. 890.25 

The act, approved June 29, 1922, creating your committee requires that the com¬ 
mittee report what surplus, if any, the District has to its credit on the books of the 
Treasury of the United States which has been acquired by taxation or from licenses. 
The general ledger account, in the division of bookkeeping and warrants, comprehend¬ 
ing the credit to the District on account of the general, special, and trust funds, had 
not on December 21, 1922, been posted for the fiscal years 1921 and 1922. The last 
available balance shown on this ledger is a credit of $7,730,053.89 as of June 30, 1920. 
This balance comprises the following: 


General fund, as per Exhibit A. $7, 376, 244.49 

Special funds. 129, 504. 66 

Trust funds. 224, 304. 74 


Total. 7,730,053.89 


The receipts and disbursements for account of the United States and the District 
from July 1, 1911, to June 30, 1922, with their effect upon the balance in the general 
fund, are summarized as follows: 



United States. 

District. 

Receipts. 

Disbursements. 

Receipts. 

Disbursements, 

Tnt.ftl rftT.ftipts, pp.r Schedule No. 1. 

$3,585,878.68 

117,151.39 

2,769,299.07 


$104,199,235.14 


Total disbursements, per Schedule No. 2. 
Interest payments by the District appli¬ 
cable to period subsequent to June 30, 

1911 . 

$80,798,587.31 

$90,162,910.60 

117,151.39 

2,769,299.07 

944,104.58 

2,632,867.28 

7,574,416.90 

Reimbmsements to United States on 
account of advances prior to July 1,1911. 
Tr«.n<?fer of funds, adjustments, etc. 


1,514.68 

Debit balance in general fund, less collec¬ 
tions in transit. Jnlv 1. 1911. 



Credit balance in general fund June 30, 
1922 . 




Total. 

• 




6,472,329.14 

80,798,587.31 
6,472,329.14 

104,200,749.82 

104,200,749.82 

7,574,416.90 


74,326,258.17 


96,626,332.92 




















































34 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


It will be noted that the net disbursements by the United States applicable to the 
period from July 1, 1911, to June 30, 1922, as arrived at above, amounted to $77,095,- 
557.24. This is exclusive of certain expenditures made by the United States, referred 
to elsewhere in this report, such as the amount of $282,422.18 charged to appropria¬ 
tions made for account of the War Department. 

The participation by the United States in the general expenses of the District was, 
except where otherwise expressly stipulated, on the basis of 50 per cent for the fiscal 
years 1912 to 1920, inclusive, and on the basis of 40 per cent for the fiscal years 1921 and 
1922. By reference to Schedule No. 2, it will be noted that disbursements for sinking 
fund purposes for the fiscal years 1921 and 1922, aggregating $1,950,816, were appor¬ 
tioned on the basis of 50 per cent to the United States, in accordance with the several 
appropriation acts. 

Our examination of the apportionment of the disbursements between the United 
States and the District, as shown in Schedule No. 2, has convinced us that every effort 
was made to apportion such disbursements in accordance with the numerous acts of 
Congress relating thereto. We noted errors as follows; 

Fiscal year 1917—Refund of taxes to the National Society of the Daughters of the 
American Revolution: The amount of $185.48 was charged to the District while the 
proper charge should have been $135.88. 

Fiscal year 1920'.^Increase of compensation: The amount of $892,908.36 was charged 
to the District but a credit on account of repayment amounting to $215.86 was not 
considered. 

Fiscal year 1922—Improvement and care, public buildings and grounds; The 
amount of $255,971.36 was charged to the District. An amount of $4,000 was included 
in this charge on the basis of 60 per cent instead of 50 per cent, resulting in an excess 
charge to the District of $400. 

In the preparation of the accompanying exhibit and schedules no adjustment has 
been made by us with respect to these comparatively small discrepancies. 

The payments and reimbursements as shown in Exhibit A are not included on the 
Treasury Department reports as receipts from District sources, but rather it is stated 
that such are treated as miscellaneous revenues of the United States. The caption 
“United States miscellaneous receipts from District of Columbia sources,” as carried 
in the Treasury Department combined statements of the receipts and disbursements, 
balances, etc., of the United States, is used to cover actual cash receipts. We recom¬ 
mend that the account to be opened upon the books of the Treasury Department, as 
provided by the act of Congress approved June 29, 1922, be made to comprehend all 
transactions in connection with the fiscal relations between the United States and 
the District, so that all expenditures, receipts, and adjustments for each fiscal year 
could be readily established. 

In connection with the determination of the balance in the general fund to the 
credit of the District at June 30,1922, it is our opinion that consideration should be 
given by the committee to assets of the District outstanding at July 1, 1878, which 
were subsequently collected and deposited to the credit of the general fund, to collec¬ 
tions on account of licenses, privileges, etc., which were deposited wholly to the credit 
of the general fund, and to disbursements made by the United States and included in 
the expenditures of certain departments of the Government, as for example through 
the War Department. 

INTEREST ON ADVANCES. 

Section 7, of chapter 250, United States Statutes at Large, volume 35, approved 
March 3, 1909, reads in part as follows: 

“That all advances made under this act and under the acts of February 11, 1901, 
July 1, 1902, March 3, 1903, April 27, 1904, March 3, 1905, June 27, 1906, March 2, 
1907, and May 26, 1908, not reimbursed to the Treasury of the United States on or 
before June 30, 1910, shall be reimbursed to said Treasury out of the revenues of the 
District of Columbia from time to time, within five years, beginning July 1, 1910, 
together with interest thereon at the rate of two per centum per annum on annual 
balances until so reimbursed.” 

Under this act interest at 2 per cent was charged to the general fund based on the 
debit balances in that fund at the beginning of certain fiscal years, as follows: 


Fiscal year. 

Debit balance. 

Interest. 

1912.. 

$2,665,081.81 
1,779,061.16 
621,521.71 

$53,301.63 
35,581.22 
12,430.43 

1913. 

1914.. 

• 

Total. 


101,313.28 
















FISCAL RELATION'S BETWEEN U. S. AND DISTRICT OF COLUMBIA. 35 

At the end of the fiscal year 1914 there was a credit balance of $68,300,24 in the 
general fund, and as the act approved March 3, 1909, was interpreted to apply only 
to advances made by the United States, interest was not credited to the general fund 
on the increasing annual credit balances subsequent to the fiscal year 1914. 

By authority of the acts of Congress approved June 25, 1910, and March 2, 1911, 
interest at the rate of 3 per cent per annum was charged on the deferred payments 
to the United States on account of one-half of the costs of acquring land for park 
purposes advanced by the United States, as follows: 


Year charged. 

Meridian 
Hill Park. 

• 

Montrose 

Park. 

Total. 

1913. 

S4,849.15 
3,752.00 
1,876.00 

$1,237.50 

825.00 

$6,086.65 
4,577.00 

1914. 

1915. 

412.50 

2,288.50 


Total. 

10,477.15 

2,475.00 

12,952.15 





An amount of $2,810.96 was charged as interest in the fiscal year 1913 on account of 
errors in reports for the fiscal year 1879 to 1897, inclusive, and an amount of $75 was 
charged in the fiscal year 1914 on account of a prior error in the division of the Wash¬ 
ington Market Co. rental between the United States and the District. This interest 
is not treated by the Treasury Department as a receipt from District sources and is not 
therefore shown under that heading in the Treasury Department reports for the fiscal 
years affected. 

PURCHASE OF CONSTRUCTION MATERIALS. 

We noticed that the available balance in the appropriation account, carried in the 
office of the District auditor, covering the reimbursable appropriation for purchase of 
construction materials was $51,666.75 at June 30, 1922, The value of supplies on hand 
at June 30, 1922, was computed by the employees of the District at $231,420.36. The 
inventory was priced, we are informed, at the contract prices prevailing on like mate¬ 
rials to be delivered to the District during the succeeding fiscal year. As materials 
are requisitioned the proper appropriation account is charged and the construction 
materials account credited on the basis of the prices used in valuing the inventory at 
the beginning of the fiscal year, and the amount charged against the appropriation is 
made available for reinvestment in materials. As the cost of materials has increased 
during latter years, this method of valuation of materials in charging appropriations 
has resulted in excessive charges to the cost of certain work done in the District and in 
using some part of the appropriations for such work in additional investment in con¬ 
struction materials. At July 1,1911, there was an inventory of $118,062.12 and at that 
date $50,000 was made available for the purchase of materials by an appropriation by 
Congress on March 2, 1911, making a total of $168,062.12. At June 30, 1922, there was 
an inventory of $231,420.36 and an unexpended balance of $51,666.75, a total of 
$283,087.11. It appears, therefore, that there was an additional investment in mate¬ 
rials and in the cash available for the purchase thereof of $115,024.99. 

We recommend that the necessary records be maintained so that the cost of materials 
consumed can be readily ascertained and that the charges to the various appropriation 
ac'counts be made to reflect the cost of materials used. 

TRASH REDUCTION PLANT. 

This plant was operated under contract by outside parties until November, 1919. 
The District assumed the operation at that time until the expiration of the contract 
on June 30, 1921, at the risk of the contractor. The District continued operation 
during the fiscal year 1922, and at June 30, 1922, the amount of $20,076.69 was on 
deposit in the miscellaneous trust fund, representing the excess of receipts over dis¬ 
bursements to that date. This balance was not transferred to the proportionate 
credit of the United States and the District at the close of the fiscal year 1922. On 
August 31, 1922, the amount of $30,000 was transferred, and this amount is said to 
represent the balance at June 30, 1922, and certain revenues collected subsequent 
to that date. No adjustment has been made by us for the amount of $20,076.69 in 
the preparation of the accompanying exhibit and schedules. 

















36 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA, 


DISPOSITION or CERTAIN RECEIPTS. 

Attention is directed to receipts from licenses, privileges, etc., as shown in Schedule 
No. 1, collected and deposited wholly to the credit of the District for the fiscal years 


1912 to 1922, inclusive, as follows: 

Motor vehicle tags... 227, 510.00 

Special reimbursable taxes. ... 9, Ol'i- 23 

Police court fines. '^30, 958. 73 

Juvenile .court fines.. ”1 420. 70 

Dog liceiises -..i. 109,139.85 

Elevator operators. 2, 891.00 

Engineers’ licenses. li 332.00 

Insurance licenses and transfers. 305, 800.18 

Miscellaneous licenses. 1, 304,137.54 

Motor vehicle operators. 203, 578. 50 

Plumbers’licenses. 318.00 

Insurance taxes on business within District. 1, 222, 092. 88 

Market rents, exclusive of Washington Market Co. 249, 498. 90 


Total. 0,300,058.57 


The auditor of the District, in his letter of November 0, 1922, addressed to the 
Commissioners of the District, goes into some detail regarding each of the above items. 
If these collections for the years 1912 to 1922, and those prior, had been apportioned 
as were certain other receipts from District sources, the balance in the general fund 
at June 30, 1922, would have been considerably less. 

Certain collections made by the clerk of the Supreme Court of the District, for the 
issuance of certain licenses and for fines assessed against jurors, are deposited in the 
Treasury wholly to the credit of the United States, 

CERTAIN DISBURSEMENTS NOT INCLUDED IN EXPENSES OF DISTRICT. 

Certain officers of the United States Army are assigned from time to time to duty in 
connection with the supervision of certain interests of the District government, and 
the pay and allowances of such officers are not considered as j>art of the costs of the 
maintenance of the District. This would comprehend the District Engineer ('om- 
missioner and his assistants, the entire time of whom, we are informed, is devoted to 
the supervision of the affairs of the District. 

An act of Congress, approved March 3, 1881, reads in part as follows: 

“And hereafter the Engineer Commissioner shall be entitled to receive such com¬ 
pensation, in addition to his Army pay and allowances, as will make his compensation 
equal to $5,000 per annum, and a sum sufficient to pay said additional compensation 
is hereby appropriated. ” 

The records indicate that the deficiencies provided for through appropriations for 
the District in conformity with this act, during the period from July 1, 1911, to June 
30, 1922, were as follows: 


Fiscal year 1915. $18C. 67 

Fiscal year 1916. 46. 67 

Total. 233. 34 


With a view to determining the approximate amount expended by the United 
States in this connection, during the period under review, we addressed an inquiry to 
the Secretary of War, requesting that we be furnished with a statement showing the 
rank, duties, and salaries paid from the appropriations for the War Department, of 





















FISCAL EFLATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 37 


Army oRicers engaged in work in eonneetion with the District. The information 
fnrnislied ns in response to onr injury is summarized helow: 


Officer. 

Designation. 

Capt. \V. V. Judson.. 

Engineer commissioner.... 

Lieut. Col. Chester Harding- 

Maj. Chas. W. Kutz... 


Brig. Geu. John G. D. Knight.. 


CoF Charies Keller.. 


Capt. Edward M. Markham- 

Capt. Mark Brooks. 

Assistant engineer com¬ 
missioner. 

Capt. J. L. Schley. 


Capt. Roger C. Powell. 


Capt. W. D. Anderson. 


Capt. J. J. Loving. 


Col. F. S. Besson^. 


Col. Carev H. Brown. 


Capt. John E. Wood. 


Lieut. Col. Win. C. Langfitt_ 

Lieut. Col. Henry C. Newcomer. 

District engineer. 

.do. 

Col. Harvey F. Bodges. 


Lieut. Col."Clement A. F. Flog- 
ler. 

Co,. Walter L. Fisk. 

.do. 


Col. Max C. Tyler. 


Capt. Warren"T. Hannum_ 

Assistant District engineer, 

Capt. Jarvis J. Bain. 

LiBit. Lewis H. Watkins... 


Lieut. Charles L. Hall. 


Maj. Earl E. Cesler. 


Capt. L. E. Oliver. 

.do. 

Capt. A. M. Neilson. 


Lieut. Richard Lee. 

.do. 

Capt. H. O. Tunis. 

.do. 

Maj. W. B. Harrison. 

..do. 

Capt. P. A. Agnew. 

_do. 

Lieut. John r 7 Hardin. 



Dates of payment of salary. 


Pay and 
allowances. 


July 31, 1911, to Feb. 28, 1913. 
Mar. 31, 1913, to Oct. 31, 1914. 
Mar. 13, 1914, to Sept. 30, 1921 
Aug. 1, 1917, to Dec. 31, 1918 . 
Oct. 31, 1921, to June 30, 1922. 
July 31, 1911, to Sept. 18,1912. 


*8,528.25 
7,930.70 
35,512. 36 
10,760. 82 
5,117. 80 
4,822.60 


July 31, 1911, to Sept. 30, 1914.. 
Nov. 15,1912, to Sept. 30,1916.. 
Aug. 31,1913, to Sept. 30,1920.. 
Oct. 31,1914, to Nov. 1,1915.... 
Oct. 31,1915, to Feb. 28,1919... 
Jan. 31, 1919, to June 30, 1922.. 
Mar. 31, 1919, to June 30, 1922 . 
Dec. 1, 1920, to June 30, 1922... 
July 31, 1911, to Jan. 31, 1914.. 
Feb. 1,1914, to July 31,1915.... 
Feb. 1,191.5, to Mar. 31,1915.... 
.1 Illy 31,191.5, to Apr. 30,1917... 


11,539.33 
14,170. 50 
17,003.31 
3,957.63 
16,116. 51 
18,264.74 
16,931.10 
6,186. 49 
14,052.01 
5,281.84 
1,061.72 
10,161. 58 


Apr. 30,1917, to Feb. 28,1919.. 
Mar. 6, 1919, to June 30, 1922 . 
July 31, 1911, to Feb. 29,1912.. 
Mav31,1912, to Nov. 30,1913.. 
Dec. 31,1913, to Aug. 3,1914... 
Jan. 5,1915, to June 30,1916... 
Sept. 4,1919, to July 20,1920... 
Apr. 30, 1920, to June 30, 1922. 
June 20,1920, to Dec. 30,1921.. 
July 20,1920, to Aug. 20,1920.. 
Sept. 20,1920, to Dec. 20,1920. 
Dec. 20,1920, to Mar. 30.1921.. 
July 21,1921, to June 30,1922.. 
Sept. 21,1921, to June 30,1922. 


10, .529. 49 
19,437.36 
2,413. 36 
4,958.93 
2,002. .53 
5,386.76 

3.830.29 
11,815. .59 

4,685.09 
732. 41 
1,133.18 
1,631.40 
3,800.14 

2.666.30 


Total 


282,422.18 


In the accounts and reports of the Secretary of the Treasury and the Auditor of the 
District, relating to the disbursements in connection with the District, no considera¬ 
tion has been given to the above expenditures nor to the compensation of certain 
other Army officers and employees of the United States rendering service to the 
District and the compensation of clerks and supervdsors of the General Accounting 
Office of the United States for services in connection with District matters. Such 
expenses as the foregoing have apparently been borne by the United States since the 
passage of the organic act, approved June 11, 1878. 

During the course of our examination our attention was directed to an act of Con¬ 
gress, approved March 26, 1898, providing for the relief of Eldred C. Davis, former 
collector of taxes in the District. This act reads as follows; 

“Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That the Secretary of the Treasury be, and he is hereby, author¬ 
ized to pay to Eldred 0. Davis, out of the money in the Treasury not otherwise appro¬ 
priated, the sum of six hundred and thirty-four dollars and thirty-three cents, the 
same being the amount paid by the said Eldred C. Davis into the Treasury of the 
United States to make good the loss occasioned by the larceny from the office of the 
Collector of the District of Columbia of the like sum of six hundred and thirty-four 
dollars and thirty-three cents. ” 

. The records indicate that the amount of $634.33 was paid out of the revenues of the 
United States and that this expenditure was not considered as part of the disburse¬ 
ments in connection with the District. 

Increases in compensation of certain employees have been charged wholly against 
the appropriations of departments of the United States Government, while the regular 
compensations, other than the increases, have been charged proportionately against 









































































38 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA 


the United States and the District. The amounts involved, as shown by the records 
of the several departments interested, are summarized as follows; 


DEPARTMENT OF JUSTICE. 

Court of Appeals: 

1918 . 

1919 . 

1920 . 

1921 . 

1922 . 

Total. 

Supreme Court: 

1918 . 

1919 . 

1920 . 

1921 .. 

1922 . 

Total. 


WAR DEPARTMENT. 

Public buildings and grounds: 

1918 . 

1919 .:. 

1920 . 

1921 . 

1922 . 

Total. 


SMITHSONIAN INSTITUTION. 

National Zoological Park: 

1918 . 

1919 .-. 

1920 . 

1921 . 

1922 . 

Total. 

Grand total. 


Amount of 
increase. 

District 
propor¬ 
tion of 
regular 
compen¬ 
sation. 

Proportion 
of increase 
correspond 
ing to 
District 
proportion 
of regular 
compensa¬ 
tion. 


Per cent. 


$520.62 

50 

$260.31 

1,047.33 

50 

523.67 

2, 156.67 

50 

1,078.33 

2,160. 00 

60 

1,296.00 

2,146.67 

60 

1,288.00 

8,031.29 


4,446.31 

525.00 

50 

262.50 

663.33 

50 

331.67 

1,440.00 

50 

720.00 

1,439.99 

60 

863.99 

1,440.00 

60 

864.00 

5,508.32 


3,042.16 

19,365.53 

50 

9,682.77 

! 30,149.27 

50 

15,074.63 

67,496.72 

50 

33,748.36 

70,031.55 

60 

42,018.93 

80,445.73 

60 

48,267.44 

267,488.80 


148,792.13 

4,471.23 

50 

2,235.62 

7,372.68 

50 

3,686.34 

16,503.32 

50 

8,251.66 

16,851.75 

60 

10,111.05 

18,875.13 

60 

11,325.08 

64,074.11 


35,609.75 



191,890.35 

. 




Acts of Congress approved June 5, 1920, and March 4, 1921, appropriating $80,000 
and $2,500, respectively, for purchase of additional land in connection with the 
National Zoological Park, did not provide for the participation by the District in such 
expenditures. The cost of land previously purchased for this purpose W'as distributed 
proportionally between the United States and the District. 

























































FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 39 


OLD BALANCES CARRIED ON TREASURY DEPARTMENT LEDGERS. 

There are certain personal accounts in which the District is apparently interested 
open on the Treasim* auxiliary ledger No. 3, in the Division of Bookkeeping and War¬ 
rants, as follows: 


Title of account. 

Debit. 

Credit. 

District of Columbia, sec. 3, act of June 11,1878 (1883). 


$440,353.43 

John T. Mitchell, building two cottages, Columbia Hospital, 1881-1884. 

John T. Mitchell, Columbia Hospital for Women and Lying-in Asylum: 

1883-1885. 

$5.00 

54.69 

4.31 

14.86 

20.31 

116,775.68 

250,000.00 
75,000.00 
75,000.00 
1,677.63 

5.00 

1884. 


Funds arising from sale of city lots, 1885. 


J. G. Lydecker, major, Corps'of Engineers: 

Washington Aqueduct, 1889. 


Increasing water supply, District of Columbia, 1897. 


Commissioners of the District of Columbia: 

General expenses. District act. Mar. 3, 1877. 


Support of public schools, reimbursable, act of Mar. 3, 1877. 

Payment of indebtedness, reimbursable, act of Mar. 3, 1877. 

Support and medical treatment of the poor, act of Apr. 4, 1878. 

M. Hebner, treasurer German Orphan Asylum Association, 1896. 

J. W. Ross, etc.. Commissioner of District of Columbia, buildings, fire depart¬ 
ment, 1897. 

71.91 




The two items of $75,000 each were found to have been charged to the District 
general fund in the fiscal year 1920 (included with an item of $50,865, in the amount 
of $200,865 shown in Exhibit A as “Act of July 11, 1919”) and we, therefore, directed 
an inquiry to the Undersecretary of the Treasury requesting that we be advised as 
to the reason for keeping these accounts open on ledger No. 3 and further requested 
explanation regarding the remaining open accounts. The letter of the Undersecretary 
is reproduced below: 

Treasury Department, 

Washington, December 12, 1922. 

Haskins & Sells, 

Room 339, Old Land Office Building, 

Washington, D. C. 

Gentlemen: In reply to your letter of November 25, 1922, relating to certain 
open fiscal accounts on auxiliary ledger No. 3, which bear on the question of the 
fiscal relations between the United States and the District of Columbia, I have to 
advise as follows: 

In connection with the two debit items of $75,000, to which you have called atten¬ 
tion as charged against the revenues of the District of Columbia in the annual state¬ 
ment of the United States and the District of Columbia for the fiscal year 1920, in 
certificate of the Auditor for the State and Other Departments No. 10351, of March 
31, 1921, you are informed that the amounts represented by these items were advances 
for expenditures, as follows: 

(1) Charged as advance of funds to W. Dennison, J. H. Ketcham, and S. L. Phelps, 
Commissioners of the District of Columbia, fiscal year 1877, $75,000. 

(2) Charged as residue of advances of funds to W. Dennison, S. L. Phelps, and 
T. B. Bryan, Commissioners of the District of Columbia, fiscal year 1878, $75,000. ^ 

Certificate No. 10351 also charges against the revenues of the District of Columbia 
the sum of $50,865, “New school building, Georgetown, D. C.,” but this amount is 
not found in Treasury auxiliary ledger No. 3 or in any other record of personal accounts 
for the reason that the money was disbursed by R. Joseph and apparently credited 
to him in his individual personal account when settled by the accounting office. 
Additional items mentioned in your letter are as follows: 

Credit balance of $440,353.43 in the account of ‘ ‘District of Columbia, under sec¬ 
tion 3, act June 11, 1878,” entered from a certified audit of June 24, 1881, per report 
(certificate) No. 222799; a debit balance of $250,000 in the account of the “Commis¬ 
sioners of District of Columbia, general expenses District of Columbia, act March 
3 1877,” being an advance from the Treasury by warrant No. 1340 of July 2, 1877; 
and a debit balance of $116,775.68 in the account of “G. J. Lydecker, major. Corps 
of Engineers, increasing the water supply of Washington, D. C.,” entered from report 
(certificate) No. 268099 of February 18, 1889. 



































40 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


It should be stated that these balances, resulting from the accountability of officers 
for funds advanced by warrant and for balances brought upon the books from certified 
audited settlements made by the accounting officers, could not be credited or debited 
except upon audit and certification of the accounting officers. 

When the Treasury advanced the sums mentioned, the personal ledgers of accounte 
of disbursing and collecting officers in which the original entries were made consti¬ 
tuted a part of the records of the office of the Register of the Treasury, and on the 
passage of the so-called Dockery Act of July 31, 1894, were transferred to the Division 
of Bookkeeping and Warrants. 

The certificate No. 10351, as stated by the Auditor for the State and Other Depart¬ 
ments, dealt only with the relations between the District of Columbia and the United 
States and did not settle or adjust the accountability of any officer for moneys received 
on behalf of the District of Columbia, and, therefore, the certificate did not name 
the persons to whom said amounts were advanced for expenditure or otherwise identify 
the items with any personal accounts carried in the old auxiliary ledger No. 3 referred 
to. The orderly procedure in such cases has required the statement by the proper 
accounting office of an account settling and adjusting the personal accountability 
of the person charged with the advance of public funds. This the Auditor for the 
State and Other Departments emitted to do, since there is nothing on the face of his 
certificate No. 10351 identifying any item therein for credit or charge in the personal 
account of any person charged with funds advanced to him for expenditure and for 
which he is accountable. 

The system of bookkeeping installed in the Division of Bookkeeping and Warrants 
on July 1, 1907, conforms to Treasury Department Circular No. 38 of June 17, 1907, as 
amended by Treasury Department Circular No. 56 of 1908, which was issued by the 
Comptroller of the Treasury and approA^ed by the Secretary of the Treasury. Under 
that system “General account No. 22; balances July 1, 1907,” was established in 
order to bring upon the books of the Treasury all old credit and debit balances in 
fiscal accounts brought into the books of the system during each current year. The 
omission of the Auditor for the State and Other Departments at the time of stating 
certificate No. 10351 of March 31, 1921, to obserA'e this requirement accounts for the 
failure of the Treasury fiscal auxiliary ledger No. 3 to show credit to the accounts of 
the persons to whom the two sums of $75,000 were ad\'anced in 1877 and 1878. 

The “Budget and accounting act” approved June 10, 1921 (42 Stat. 25) provided 
that all books, records, and documents relating to the personal ledger accounts of 
disbursing and collecting officers should be transferred to the General Accounting 
Ofllce, but, owing to the lack of available space, a portion of the old records consist¬ 
ing of ledgers, etc., remains in the custody of the DiAusion of Bookkeeping and 
Warrants until proper provision shall be made by the Comptroller General for their 
storage. 

Copy of this letter, together Avith copy of your letter of November 25, 1922, has 
been transmitted to the Comptroller General of the United States in order that he 
may determine if additional certificates should be made in the fiscal accounts of the 
persons hereinbefore named, in order to remoA^e the balances standing charged to 
them. 

Referring to previous correspondence regarding the sinking fund of the District of 
Columbia, I take pleasure in transmitting to you herewfith copy of a letter, and accom- 
panAung statements, of December 1, 1922, of Mr. Walter O. Woods, reporting on the 
interest and sinking fund of the District of Columbia and related accounts. Mr. 
Woods AA'as designated by the Secretary of the Treasury to examine and adjust the 
accounts kept in the office of the Treasurer of the United States, as you Avere adAused 
by letter of October 21, 1922. 

By direction of the Secretary: 

Respectfully, 


S. P. Gilbert, Jr., Undersecretary. 


The letter of Mr. Walter 0. Woods, aboA^e referred to, is reproduced elsew^here in 
this report. A copy of the reply of the Comptroller General to the Secretary of the 
Treasury in response to the latter’s letter of December 12, 1922, is reproduced beloAv: 


Comptroller General of the United States, 

Washington, December 14, 1922. 

The Secretary of the Treasury. 


Sir: I haA^e your letter of December 12, 1922, relative to an inquiry of the account¬ 
ants Haskins & Sells, representing the Joint Select Committee on Fiscal Relations 
of the District of Columbia and the United States as to certain balances on the ledgers 
of the Treasury Department with relation to the District of Columbia. 

The balance reported as upon the auxiliary ledger No. 3 is of tAA'o amounts of $75,000 
each, and pursuant to the act of July 11, 1919 (41 Stat. 103, secs. 8 and 9), these items 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 41 


were charged against the District of Columbia. The act of July 11, 1919, shows that 
the items relate to certain advances of $75,000 for the support of schools and a balance 
from $400,000 advanced for the payment of interest on funded debt and current 
expenses of the District of Columbia. In so far as book entries were made pursuant 
to the original enactments under which the funds were advanced, I am of opinion 
the settlement No. 10351 made March 31, 1921, by the Auditor for the State and Other 
Departments was authority to make the necessary entries in adjustment accordingly 
and that the same may now be done. 

The debit balance of $250,000 reported is understood to appear on the books of the 
Treasury as advanced under accountable warrants, but that no entries appear as to 
that accountability. A credit item of $440,353.43 is understood to be a balance arising 
from a certificate of audit No. 222799 of June 24, 1881. A debit balance of $116,775.68 
is reported as being in the account of ‘‘G. J. Lydecker, major. Corps of Engineers, 
increasing the water supply of Washington, D. C.,” and is understood to be based 
upon audit certificate No. 274283 of February 18, 1889. These three items will be 
made the matter of investigation of the records and accounts of this office and such 
information as may be necessary to obtain from the records and accounts of the District 
of Columbia, and according to the information thus obtained you will be advised 
further therein. 

Respectfully, 

J. R. McCarl, 

Comptroller General. 


The credit balance of $440,353.43 is shown by certificate No. 222799, June 23,1881, 
as representing the balance to the credit of the District at the end of the fiscal year 
1880, after consideration of appropriations and disbursements during that fiscal year 
and a credit balance at the beginning of the year of $172,254.19. We are informed by 
the clerk, now retired, who stated the District account from the fiscal years 1881 to 
1921, inclusive, that a stated account was prepared at the end of the fiscal year 1881 
comprehending all transactions for the fiscal years 1879 to 1881, inclusive. This 
stated account can not be located although some effort has been made to do so. If the 
information furnished by the clerk is substantiated when the stated account at the 
end of the fiscal year 1881 is located and it is found that the accounting for the District 
general fund, continued to the present time, is based upon the combined statement 
for the fiscal years 1879 to 1881, it will be apparent that there was a duplication in 
stating the account for the fiscal year 1880 and that the balance of $440,353.43 is incor¬ 
rect and should be disregarded by your committee. 

The result of the investigation of the Comptroller General of the remaining open 
items had not been brought to our attention up to the time of the preparation of this 
report. 

FUNDED DEBT OF THE DISTRICT OUTSTANDING JUNE 30, 1878. 


An abstract of the funded debt of the District outstanding at June 30, 1876, as 
shown by the report of the Treasurer of the United States, ex officio commissioner of 
the sinking fund. District of Columbia, dated November 30, 1878, is furnished below. 
Particulars as to the funded debt outstanding at July 1,1874, are not readily available, 
and we have accepted the date of June 30,1878, for the purpose of this report, as the 
funded debt at that date was approximately the same as at the time of the passage of 
the act establishing a permanent form of government for the District, approved 
June 11, 1878. This act is popularly known as the “organic act.” 


Abstract. 

General stock, Georgetown: Date of issue by corporation of Georgetown 
not shown. It apparently funded the indebtedness of the corporation 
to certain persons. Interest at the rate of 6 per cent per annum was 
payable quarterly in currency. The stock was considered redeemable 

at the pleasure of the corporation. 

Registered general stock, Washington: 

This issue, bearing date of July 1, 1828, was authorized by an ordi¬ 
nance of the corporation of Washington, approved Aug. 19, 1828. 
Interest at the rate of 5 per cent per annum was payable quarterly. 
This stock was redeemable at the pleasure of the corporation after 
the expiration of 10 years. Issued to the holders of certain lottery 
tickets. By act of Mar. 10, 1842, this stock was convertible into 
6 per cent stock on the basis of $100 of 5 per cent stock for $83.33 
of 6 per cent stock. 

32894—S. Doc. 301. (>7-4 


Amount 

outstanding. 


$178, 300 


53, 000 


4 





42 FISCAL EELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Registered general stock, Washington—Continued. 

Authorized by ordinance of the corporation of Washington, approved 
Oct. 25, 1843. Provided for the consolidation of outstanding 
6 per cent stock, that issued for the purchase and improvement of 
the Washington City Canal, subscription to the Chesapeake & 
Ohio Canal, and redemption of due bills. Issue to be known as 
the general fund 6 per cent stock. No reference is made to the 

redemption of principal. 

Chesapeake & Ohio Canal stock, Washington: Authorized by ordinance 
of the corporation of Washington, approved Apr. 14, 1847. Interest 
at the rate of 6 per cent per annum and principal redeemable at the 
pleasure of the corporation. Issued to aid in the completion of the 
Chesapeake & Ohio Canal to Cumberland, and to be exchanged for 
bonds of the Chesapeake & Ohio Canal Co. at a like par value and 
interest rate and the total exchanged not to exceed aggregate par 

value of $50,000. 

Market stock, Georgetown: Authorized by ordinance of the corporation 
of Georgetown, approved Jan. 9, 1864. Issue not to be in excess of 
$35,000, par value, interest at 6 per cent per annum, payable quar¬ 
terly, and principal redeemable at the pleasure of the corporation 
within 10 years. Proceeds of this issue to be used for erection of a 

new market house. 

Bounty stock, Georgetown: Authorized by ordinance of the corporation 
of Georgetown, approved Sept. 24, 1864. Interest at 6 per cent, pay¬ 
able quarterly, and the principal not to exceed $20,000, was redeem¬ 
able after 5 years and payable after 20 years. This issue was for the 
purpose of filling the quota of Georgetown under a call of the President 
for volunteers. Section 2 of the ordinance provided that the ordi¬ 
nance should not go into effect, and no portion of the money appro¬ 
priated should be paid, until the amount contributed by private per¬ 
sons to prevent the draft, should be paid or secured to the corporation.. 
10-year (Bowen) bonds, Washington: Authorized by an act of Congress, 
approved July 27, 1868, and an ordinance of the corporation of Wash- 
, ington, approved October 17, 1868. The authorized issue was not to 
exceed $500,000, and to bear interest at the rate of 6 per cent per 
annum, payable semiannually. A condition in the acts required that 
an amount of not less than 10 per cent of the bonds issued be annually 
set apart to constitute a sinking fund for the payment of the bonds on 

Jan. 1, 1879, the date of maturity... 

3-year (Emery) certificates, Washington: Authorized by an act of Con¬ 
gress, approved July 7, 1870, and an ordinance of the corporation of 
Washington, approved July 29, 1870. These certificates of indebted¬ 
ness were dated July 30, 1870, payable in 3 years, were authorized to 
an amount not exceeding $600,000 and to bear interest at a rate not 
exceeding 7^ per cent per annum. The certificates were to be 
receivable for taxes due the corporation to an amount not exceeding 

33 J per cent of yearly amount due by any taxpayer. 

General stock, Georgetown: Authorized by an ordinance of the corpora¬ 
tion of Georgetown, approved May 12, 1871. Interest rate at 8 per cent 
per annum. Data as to amount authorized, how and when redeemable 

not available. 

Permanent improvement, 6 per cent bonds. District of Columbia: Au¬ 
thorized by acts of the Legislative Assembly of the District of Columbia, 
approved July 10 and December 16, 1871, and an act of Congress, ap¬ 
proved May 8, 1872. Authorized issue was not to exceed $4,000,000 
and to bear interest at the rate of 6 per cent in gold or 7 per cent in cur¬ 
rency, and principal to be payable vdthin 20 years from December 20, 
1871, the date of issue. Section 7 of the act of July 10, 1871, provides 
for the paj^ent of the interest and the gradual redemption of the bonds 
by authorizing a sum sufficient for the purpose to be annually levied 
and collected upon the assessed value of property, respectively, in the 
cities of Wasliington and Georgetown and the County of Washington 
in the proportion to the improvements which shall have been made 
therein. Section 8 makes it a misdemeanor for any officer, fiduciary 
agent, or employee of the District government to appropriate or apply, 
or in any manner consent, aid, or assist in appropriating and applying 
any portion of any money provided for the redemption of the bonds or 


Amount 

outstanding. 


$685, 000 


47, 500 


30,000 


20, 000 


279,000 


100 

20,000 








FISCAL RELATIONS BETWEEN V. S. AND DISTRICT OF COLUMBIA. 43 


the payment of the interest, or to direct or use any money belonging to 
the improvement fund for any other purposes than those for which the 

fund was created. 

Water stock bonds, District of Columbia: Authorized by an act of the 
Legislative Assembly of the District of Columbia, approved July 20, 
1871. The authorized issue was not to exceed the par value of $450,- 
000 and to bear interest at a rate not exceeding 7 per cent per annum. 
The bonds were payable in 30 years from October 1, 1871, the date of 
issue. The issue was to provide the funds with wdiich to lay a new 36- 
inch water main. There was to be set apart, pledged, and appropriated 
out of the water fund such sum as may have been necessary to pay the 
interest on the bonds and an amnual amount of $15,000 for the redemp¬ 
tion of the bonds. Section 2 pledges the faith of the District govern¬ 
ment for the punctual payment of the interest and the gradual redemp¬ 
tion of the principal. Section 8 makes it a misdemeanor for any officer, 
fiduciary agent, or employee of the District government to divert, for 

any purpose, the funds as above provided for. 

Market stock bonds. District of Co.umbia; Authorized by an act of the 
Legislative Assembly of the District of Columbia, approved August 23, 
1871, and June 19, 1872. The authorized issue was not to exceed 
$300,000, payable 20 years from the date of issue, July 26, 1872, and to 
bear interest at a rate not exceeding 7 per cent per annum. This issue 
was to provide funds for the purchase of sites and to erect market houses 
in the northern and western sections of the city of Washington. Out of 
the funds arising from the markets there was to be set apart, pledged, 
and appropriated a sum sufficient to pay the interest on the bonds and 
$15,0()0 annually for the gradual redemption of the bonds. The faith 
of the District was pledged for the punctual payment of the interest 

and the gradual redemption of the bonds. 

20-year funding bonds. District of Columbia; Authorized by an act of 
Congress approved May 8, 1872. This issue was to fund the floating 
debts and trust funds of the city of Washington found to be due June 1, 
1871, not exceeding $1,150,000. The bonds were to run for a period 
of not less than 15 years nor more than 30 years, and to bear interest, 
not to exceed 6 per cent per annum, payable semiannually in gold. 
Authority was granted to sell the issue at a discount not to exceed 3 
per cent of the par value. Section 2 authorized the legislature to cause 
to be levied and collected annually, on the taxable property within 
the limits of the city of Washington, a tax sufficient to pay the interest 
and create a sinking fund for the redemption of the bonds at maturity.. 
30-year funding bonds. District of Columbia: Authorized by an act of 
the Legislative Assembly of the District of Columbia, approved June 
20, 1872. The bonds were dated Nov. 1, 1872, due 30 years from that 
date, and bearing interest at a rate not to exceed 6 per cent per annum. 
This issue was to fund certain contracts and obligations of the city of 
Washington, including the 7-j^ per cent certificates of indebtedness not 
provided for by the act of Congress approved May 8, 1872. Section 2 
provided that a tax sufficient to pay the interest on the bonds and to 
create a sinking fund for their redemption at maturity should be levied 
annually on all taxable property in the city of Washington. The 
collector was directed to turn over all funds collected for the pur])oses of 
payment of interest and sinking-fund contributions to the sinking-fund 
commissioners. There was prepared for issue bonds of a par value of 

$1,650,000, but only $662,300 were actually issued. 

7 per cent permanent improvement bonds, first issue. District of Co¬ 
lumbia: Authorized by an act of the Legislative Assembly of the Dis¬ 
trict of Columbia approved June 23, 1873. These bonds were dated 
July 1, 1873, hearing interest at the rate of 7 per cent per annum, and 
payable on July 1, 1891. These bonds were issued to cover the loss in 
the sale of the $4,000,000 permanent improvement 6 per cent bonds, 
issued under act approved July 10, 1871, at a discount aggi’ogating 

$260,000.... 

7 per cent permanent improvement bonds, second issue. District of Co¬ 
lumbia; Authorized by an act of the Legislative Assembly of the Dis¬ 
trict of Columbia approved June 25, 1873. These bonds were issued 


Amount 

outstanding. 


$3, 995, 000 


397,000 


150,000 


1, 150, 000 


660, 000 


224, 000 








44 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Amount 

outstanding. 

to pay certain appropriations, not to exceed $530,000. The bonds were 
dated July 1, 1873, bearing interest at a rate of 7 per cent per annum, 

and matures on July 1, 1891...... 

Water-stock bonds. District of Columbia; Authorized by an act of the 
Legislative Assembly of the District of Columbia approved June 26, 

1873. The bonds were dated July 1, 1873, bearing interest at the rate 
of 7 per cent per annum, and matured on July 1, 1903. The bonds 
were to pay a deficiency in the appropriation for laying the 36-inch 
and other principal water mains and not to exceed the amount of 

$35,000.. 

Steam force pump bonds. District of Columbia: Authorized by an act of 
the Legislative Assembly of the District of Columbia approved June 
26, 1873. The bonds were dated Mar. 1, 1874, bearing interest at the 
rate of 7^ per cent per annum, and matured Mar. 1, 1879. The bonds 
were issued to erect a steam force pump and lay a water main in High 
Street, Georgetown, at a cost not to exceed $15,000. There were ap¬ 
propriated out of the general fund of Georgetown such sums as would be 
sufficient to pay the interest on the bonds and to provide not less than 
$3,000 annually for the redemption of the bonds. Section 5 provides a 
penalty, including fine and imprisonment, for any person diverting 

the fund from its original purpose. 

3.65 bonds, District of Columbia: Authorized by an act of Congress, 
approved June 20,1874, and amended by an act approved Feb. 20, 

1875. These bonds were dated Aug. 1, 1874, bearing interest at the 
rate of 3.65 per cent per annum, and will mature Aug. 1, 1924. These 
bonds were issued to fund the unfunded or floating debt of the Dis¬ 
trict, including the refunding of sewer taxes or assessments previously 
paid. Subsequently the authorized issue was fixed at a maximum 


of $15,000,000. 13,743,250 

Total outstanding, June 30, 1878. 22,106, 650 


Referring to the issue of 30-year funding 6 per cent bonds outstanding at June 30, 
1878, in the amount of $660,000, attention is directed to section 10 of the act of Congress 
approved June 20, 1874, reading as follows: 

“That the act of the Legislative Assembly of the District of Columbia, entitled 
‘An act to fund unsettled liabilities of the city of Washington, and providing for the 
issuing of the bonds, and levying and collecting taxes to pay the same,’ approved 
June 20, 1872, is hereby ratified and approved; but none of the bonds authorized by 
said act remaining unsold shall be negotiated or sold at less than par.” 

Notwithstanding the fact that specific provisions for the collection of funds with 
which to pay interest and sinking fund contributions were carried in the acts author¬ 
izing certain of this funded debt, the records indicate that only the amount of 
$14,943.73 was turned over to the Treasurer of the United States, as ex-officio Commis¬ 
sioner of the District of Columbia sinking fund, on June 29, 1878, by the retiring com¬ 
missioners of the sinking fund. 

An act of Congress, approved June 10, 1879, granted authority to the commissioners 
of the District to issue bonds of the District bearing interest at a rate not exceeding 
5 per cent per annum, redeemable 20 years after date, to an amount not exceeding 
$1,200,000. The proceeds of these bonds to be used only for the redemption of the 
funded debt of the District or late municipal corporations of Washington and George¬ 
town which became due on January 1 and March 1, 1879. This act carried the fol¬ 
lowing provision: 

Provided, That this act shall not be construed to make the Government -of the 
United States lialile for either the principal or interest of said l)onds, fir any part there¬ 
of. ” 

The second annual report of the commissioner of the sinking fund recites the fact 
that lionds of a par value of $1,092,300 were issued under this act, and that, of the 
proceeds, $810,800 was used for the redemption of the old funded debt and $281,500 
was used to reimburse the United States for an advance of a like amount jireviously 
made available for the redemption of certain old funded debt. The commissioner 
for the sinking fund commented on the provision in the act exempting the United 
States from liability on account of these bonds, as follows: 

“ It would be a difficult proposition to substantiate that the Lhiited States is not the 
obligor of the bonds. The question is not, however, a vital one, for while the present 
arrangement continues, under which the Government contributes 50 per cent to the 


$446, 000 


26, 000 


2. 500 








FISCAL RELATIONS BETWEEN TJ. S. AND DISTRICT OF COLUMBIA. 45 


yjayment of the general expenses of the District, its contribution is sufficient to pay 
the annual interest upon the bonds debt of the District, to establish a sinking fund 
for the ultimate redemption of that debt, and leave more than half a million of dollars 
for other purposes. ” 

An act of Congress, approved March 3,1891, furnished authority to the commissioner 
of the sinking fund to prepare and issue bonds of the District to be known as 10-year 
funding bonds, bearing interest at the rate of 3^ per cent per annum. The proceeds 
from the sale of these bonds were to be used for the redemption of any District bonds 
falling due on July 1, 1891, and July 1 and 26, 1892. The act did not stipulate the 
amount of this issue, but the sixteenth annual report to the commissioner shows that 
the par value of the bonds issued aggregated 12,800,000. 

Subsequent to June 30, 1878, 3.65 per cent bonds were issued aggregating $1,256,750,, 
which brought the total issue of these bonds to $15,000,000. 

The records indicate that subsequent to June 30, 1878, the United States has by its 
proportional appropriations participated in the payment of the interest and the 
redemption of the principal, including the premiums paid, of the entire funded debt 
of the District, exclusive of the comparatively small amount of 3.65 per cent bonds 
outstanding and unprovided for at June 30, 1922. The apparently inconsistent 
handling of the reimbursement of $281,500 to the United States, referred to on the 
next preceding page, by having the United States participate in the cost of interest 
and redemptions of bonds, the proceeds of which were used to reimburse the United 
States, is here brought to the attention of your committee. 


FUNDED DEBT OF THE DISTRICT OUTSTANDING JUNE 30, 1922. 


The outstanding funded delit of the District at June 30, 1922, exclusive of certain 
matured bonds not yet presented for redemption, for which cash is now on deposit 
with the Treasurer of the United States, is summarized in the forty-fifth annual 
report of the commissioner of the sinking fund as follows: 

3.65 per cent funding loan bonds due Aug. 1, 1924: 

Total issue. $15, 000, 000 

Retired. 10, 280, 300 


Outstanding June 30, 1922....- 


4, 719, 700 


The obligations of the United States shown to be held at June 30, 1922, representing 
the sinking-fund investments for the redemption of the above outstanding bonds, 
were as follows: 


Description. 


Par value. 


Victory notes, 4f per cent, due 1923. $2, 335, 000 

Liberty loan bonds: 

First 4^ per cent, due 1932-1947. 112, 500 

Second 4^ per cent, due 1927-1942. 200, 000 

Third 4J per cent, due 1928. 25, 000 

Fourth 4| per cent, due 1933-1938. 1, 500, 000 

3 per cent Panama Canal loan bonds, due 1961. 345, 000 


Total 


4, 517, 500 


SINKING-FUND OFFICE. 

Considerable difficulty was experienced by us in our examination of the books and 
accounts of the Treasurer of the United States in his capacity as ex officio commis¬ 
sioner of the District of Columbia sinking fund. As stated in our preliminary report 
dated November 20, 1922, Mr. W. 0. Woods, a Treasury Department employee, was 
assigned by the Secretary of the Treasury to examine and adjust the books and ac¬ 
counts in the sinking-fund office. A preliminary statement of Mr. Woods, addressed 
to the Undersecretary of the Treasury, dated December 1, 1922, illustrates to some 
extent the condition of the records as we found them, and the statement is reproduced 
here for the benefit of your committee. 

December 1, 1922. 

The Undersecretary of the Treasury. 

Sir: Pursuant to the directions contained in the letter of October 21, 1922, in which 
the writer was directed to examine and adjust the accounts kept in the office of the 
Treasurer of the United States relating to the sinking fund of the District of Columbia 
and make report regarding the adjustments that may be found necessary, the follow¬ 
ing intermediate report is submitted: 














46 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The book records of the sinking fund under date of June 30, 1922, set forth that 
the following balances represented the sums due the United States on that date: 


Sinking fund, 3.65 bonds. $45, 965. 62 

Redemption of 10-year Bowen bonds. 100. 00 

Sinking fund, old funded debt. 880.18 

Interest on old funded debt. 1, 299. 86 

Gain by redemption of fractional interest coupons. .13 

-$48, 245. 79 

Old miscellaneous debts. 5, 797. 34 

Interest account, 3.65 bonds. 12, 908. 88 


Total due United States. 66, 952. 01 

The books of the Accounts Division of the office of the Treasurer of the United 
States on June 30, 1922, set forth that the following balances represented the amounts 
on deposit subject to the check of the commissioner of the District of Columbia sinldng 
fund: 


Symbol 17004 
Symbol 17005 
Symbol 17001 


$48, 245. 79 
5, 797. 34 
3, 564. 46 


Total. 57,607.59 

The difference between the amount due the United States and the amount on 
deposit represents an apparent shortage of $9,344.42 in the interest account. It has 
been ascertained that the following items were erroneously charged to the interest 
account: 


Properly chargeable to Porto Rico interest account. $1, 200. 00 

Do... 800.00 

Do. 60. 00 

Do. 680. 00 

Properly chargeable to Philippine interest account. 2, 000. 00 


Total erroneously charged to interest account. 4, 740. 00 

Erroneously charged to Porto Rico interest account properly chargeable to 

District of Columbia interest account. .91 


The books of the Accounts Division of the office of the Treasurer of the United 
States disclose that a check for $4,562.50 chargeable to the District of Columbia sink¬ 
ing-fund interest account and interest coupons aggregating $43.80 also properly charge¬ 
able to that account, were paid by the Treasurer of the United States and charged to 
the proper account, but credit had not been claimed for these items on the sinking- 
fund books nor on the account current of the commissioner of the District of Columbia 
sinking fund up to June 30, 1922. 

The books of the commissioner of the District of Columbia sinking fund set forth 
claims for credit during the period from July 1, 1912, to June 30, 1922, of $0.97 more 
paid for the redemption of interest coupons than was actually disbursed by the Treas¬ 
urer of the United States for that purpose. The difference arises from the fact that 
the District of Columbia 3.65 bonds were issued in denominations of $50 and $500, 
with interest coupons payable semiannually for $0.91^ and $9.12^. Some of the 
coupons were redeemed singly and consequently the fraction of a cent became a gain 
that was reflected in the depository balance because credit was claimed on the sinking 
fund books for the multiple of the face value of the paid coupons. 

To correct the accounts which represent the District of Columbia sinking fund re¬ 
ceipts and disbursements required that the Treasurer of the United States should 
charge the interest account under symbol 17001 with $0.91 and credit it with $4,740. 
These correction entries have now been made and the balance to the credit of that 
account as of June 30, 1922, is $8,303.55. 

The commissioner of the District of Coluipbia sinking funds, in order to adjust the 
sinking fund books, should credit the interest account with the items referred to above 
as $4,562.50 and $43.80, or $4,606.30 and charge it with $0.97. When these entries 
are made the balance of the interest account due the United States as of June 30, 1922, 
will be disclosed as $8,303.55 and agree with the amount on deposit. 

Two copies of a balanced statement of the sinking fund cash account, as it should ap¬ 
pear under date of June 30, 1922, and which sets forth the dates under which the er¬ 
roneous entries were made, are transmitted herewith. 

























FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 47 


It has been observed by the undersigned that the published report of the commis¬ 
sioner of the District of Columbia sinking fund under date of June 30, 1922, declares 
on page 12 that the cash balance on July 1 , 1913, was $107,043.53, and that the pub¬ 
lished report under date of June 30, 1914, on page 11 , sets forth that the cash balance 
July 1 , 1913, was $98,966.02, 'which is a manifest error of $8,077.51, since the balance is 
decreased between the end of the fiscal year 1913 and the beginning of the fiscal year 
1914. This difference is not explained in the report but has been ascertained to be 
represented by the following items which were then and are at this date due the 
United States and were then and are now on deposit and subject to the check of the 
commissioner of the sinking fund: 


Redemption of Bowen bonds. $100. 00 

Sinking fund, old funded debt. 880.18 

Interest on old funded debt. 299. 86 

Gain by fractional coupon redemption. ’ .13 

Old miscellaneous debts. 5 ^ 797 . 34 


Total. 8,077.51 


The reconciliation of the cash account has been completed, as set forth above, but 
the adjustment of the various accounts contained in the sinking fund ledger will 
require further analysis of the accounts, some of which are large and extend over a 
period of nearly 50 years. The information is not yet obtained which will enable the 
writer to make proper recommendations regarding the entries necessary to clear the 
books of certain surplus accounts which should be eliminated in order that the true 
balances may be clearly reflected and the purpose for which each exists become ap¬ 
parent. This preliminary statement is submitted in order to report that the cash 
account is in harmony wdth the amount on deposit and that the sum on deposit is the 
amount that the accounts of the General Accounting Office disclose is due the United 
States. 

Respectfully, 

W. O. Woods. 

The statement which accompanied Mr. Woods’s report shows the dates when the 
erroneous charges were made, as follows: 

Date charged. 


July 6 , 1916. $1, 200 

Jan. 16, 1919. 800 

June 6 , 1919. 60 

July 12, 1919. 2, 000 

July 12, 1919. 680 


Total. 4,740 


This condition indicates that no reconcilement of the cash on deposit with that 
called for by the accounts in the sinking fund office had been effected since July 6 , 
1916. The errors made also affect-the reconcilements, if any, that have been made 
of the Porto Rico interest account since July 6 , 1916, and or the Philippine interest 
account since July 12, 1919. 

The current ledger in use in this office carried certain balances brought forward 
from an old ledger previously used. This latter ledger could not be located, although 
some time was spent in a search for it. 

The thirty-seventh annual report of the Treasurer of the United States on the 
sinking fund and funded debt of the District for the fiscal year ended June 30, 1914, 
shows that in the redemption of certain funded debt since June 30, 1878, premiums 
were paid as follows: 





Par value 
redeemed. 

Premiums. 

3.65 per cent bonds. 

$7,985,650.00 
8,344,519.82 

$1,026,378.96 

369,499.94 


Total. 

16,330,169.82 

1,395,878.90 





























48 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


These figures of premiums apparently include an undetermined amount of pur¬ 
chased interest, as certain reports of the Treasury show purchases of the 3.65 per cent 
bonds, as follows: 



Par value 
purchased. 

Price per $100 
par value (in¬ 
cluding ac¬ 
crued in¬ 
terest). 

Twenty-fifth report, fiscal year 1922. 

$222,850.00 

204,550.00 

$126.00 

Do'....'. 

125.75 

Do.. 

89; 100.00 
50.00 

125.625 

Do. 

125.50 

Do. 

1,000.00 

125.00 

Do. 

4,250. 00 

124.00 

Twenty-sixth report, fiscal year 1903. 

275,950.00 

125. 50 

Do. 

2; 650.00 

123.675 

Do. 

Thirty-fourth report, fiscal year 1911. 

3,500.00 

500,000.00 

121.00 
107. 70 

Do.k....■.. 

6', 000. 00 

107.69 

Do. 

20; 000. 00 

107.64 




Under date of December 22, 1922, Mr. W. 0. Woods rendered to the Undersecretary 
of the Treasury his final report on his examination of the books and accounts of the 
sinking fund office. The report is lengthy and we suggest that your committee obtain 
a copy from the Undersecretary of the Treasury so that you may, if you so desire, 
become familiar with the conditions existing in the sinking fund office as Mr. Woods 
found them, and his recommendations for the correction of those conditions. 

OFFICE OF THE COLLECTOR OF TAXES. 

Following is a summary of the uncollected taxes at June 30, 1922, as shown by the 
records in the office of the collector of taxes: 


Real estate. .$ 2 , 034, 533. 23 

. Personal, tangible. 1 , 268, 346.02 

Personal, intangible.. 204, 958.41 

Special, reimbursable. 12,858.97 

Water main. 102,400.32 

Special assessment. 336, 437. 26 


Total. 3,959,534.21 


The follo\\ung shows the years in which the real estate and personal taxes were 
levied: - * 



Real estate. 


1877. 

. $8, 772. 21 

1902. 

. $1, 039. 58 

1880. 

. 10, 507. 03 

1903. 

. 423.85 

1881. 

. 4,074. 20 

1904. 

. 1, 039. 25 

1882. 

. 2, 374.12 

1905. 

. 1, 516. 27 

1883. 

. 1, 943. 81 

1906. 

. 1, 657. 59 

1884. 

. 1,149. 61 

1907. 

. 3,965.78 

1885. 

. 1, 266.19 

1908. 

. 2, 946.18 

1886. 

. 997.60 

1909. 

. 1, 407. 77 

1887. 

. 1, 286. 83 

1910. 

. 14,144.18 

1888. 

. 1, 241. 94 

1911. 

. 15, 392. 42 

1889. 

. 1, 207. 28 

1912. 

15, 572. 28 

1890. 

. 1,636.52 

1913. 

. 18, 878. 09 

1891. 

. 1, 661. 67 

1914. 

. 43, 257. 26 

1892. 

. 1, 501. 64 

1915. 

. 53, 802. 40 

1893. 

. 1, 780. 50 

1916. 

. 54,122. 82 

1894. 

. 2,444. 52 

1917. 

. 67, 420. 20 

1895. 

. 2,180. 56 

1918. 

-. 70, 279. 57 

1896. 

. 3, 622. 53 

1919. 

. 74, 888. 59 

1897. 

. 2, 434. 24 

1920. 

. 81,163. 50 

1898. 

. 2,169. 59 

1921. 

. 115, 097. 02 

1899. 

. 1,416.46 

1922. 

. 1,338,535.64 

1900. 

. ].379. 41 



1901. 

. 934.53 

Total. 

. 2,034,533.23 















































































FISCAL RELATIONS BETWEEN V. S. AND DISTRICT OF COLUMBIA. 49 


1903 

1904 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913 


1918 

1919 

1920 


Personal, tangible. 


$7, 293. 20 
11, 670. 21 
12,779. 95 
19, 518. 45 
25,129. 02 
17, 287. 48 
15, 779. 37 
15, 971. 06 
17, 526. 59 
22,170. 98 
35,492. 49 


1914 

1915 

1916 

1917 

1918 

1919 

1920 

1921 

1922 


Total 


Personal, intangible. 


$14,010. 98 
24, 619. 33 
33, 463. 04 


1921 

1922 


Total 


$50, 230.16 
23, 679. 25 
24,107. 95 
30, 293. 56 
36, 899. 36 
55,928. 59 
83, 621.13 
150, 579. 63 
612, 387. 59 


1,268, 346. 02 


$41,185. 84 
91, 679. 22 


204, 958. 41 


Time was not available to us to take trial balances of the individual real and personal 
tax ledgers to prove that the aggregate of the open items was in agreement with the 
totals shown as uncollected. We are informed that no such trial balances have ever 
been prepared by the collector’s office. Our request for the details of the amount 
of $8,772.21 carried as uncollected for the fiscal year 1877 brought the response that 
the office records do not show the details prior to the fiscal year 1880. 

We prepared a trial balance of the open items carried in the special reimbursable 
tax ledger, and ascertained that the details were $802.05 less than the total carried 
as uncollected at June 30, 1922. 

The amount of water main taxes shown as uncollected at June 30, 1922, was $102,- 
400.32. The open balances shown by a trial balance prepared by us from the card 
record aggregated $106,276.23. 

The controlling account covering the special assessment taxes carried in the auditor’s 
office shows a balance outstanding at June 30, 1922, of $336,437.26. A trial balance 
prepared by the employees in the special assessment tax division showed the aggre¬ 
gate of the open items to be $384,220.73. 

We recommend that these differences be investigated and adjusted. 

In connection with the real estate taxes, we noticed that the report for the fiscal 
year ended June 30, 1902, showed the uncollected real estate taxes at the beginning 
of that year as $636,436.42, which was $58,196.79 in excess of the amount carried as 
outstanding at the same time on the report for the fiscal year ended June 30, 1901. 
The auditor’s ledger containing the controlling accounts for the period in question 
not being available, the reason for this discrepancy could not be determined. 

The records indicate that of the taxes uncollected at June 30, 1878, the amount of 
$1,622,739.75, including penalties, was collected and deposited to the credit of the 
District in the District general fund subsequent to June 30, 1878. 


OFFICE OF THE REGISTER OF WILLS OF THE DISTRICT OF COLUMBIA. 

Following is a summary of the receipts, disbursements, and excess of receipts over 
disbursements for the fiscal years ended June 30, 1900 to 1922, as shown by the avail¬ 
able records in the office of the register of wills, exclusive of certain suspensions and 
disallowances included in Exhibit A as receipts' 


Fiscal year. 

Receipts. 

Disburse¬ 

ments. 

Excess of 
receipts 
over 

disburse¬ 

ments. 

1900. 

$16,911.41 

21,441.74 

$16,904.32 
21,410.62 

$7.09 

1901. 

31.12 

1902. 

23,493.52 
29,877.13 

23,434.90 
29,847.60 
30,210. 86 

58.62 

1903. 

29.53 

1904 . . 

30,210. 86 


1905. 

27,146. 37 

27,040.68 

ibo. 69 

1906. 

30,072.66 

29,762.15 

310.51 

1907. 

31,051.86 
32,300. 59 

31,048. 47 

3.39 

1908. 

32,169. 21 

131.38 

1909. 

30, 798. .56 
33,738.98 
37,498. 92 

30,557. 78 
33,162. a3 

240. 78 

1910. 

576. 95 

1911. 

37,338.84 
40,830. 85 

160. 08 

1912. 

41,104. 21 

273.36 






Fiscal year. 

Receipts. 

Disburse¬ 

ments. 

Excess of 
receipts 
over 

disburse¬ 

ments. 

1913. 

$41,292.05 
42,267.58 
39,922.79 
43,494. 21 

$41,215.77 
42,210.49 

$76.28 

1914. 

57.09 

1915. 

39,900.83 

21.96 

1916. 

43,257.82 

236.39 

1917. 

46,198.18 

46,008.39 

189. 79 

1918. 

43,330.96 

43,321. 82 
49,385.56 

9.14 

1919. 

49,411. 48 

25.92 

1920. 

55,107.37 
66,946.14 

54,879.18 

228.19 

1921. 

66,616. 41 

329.73 

1922. 

70,680. 52 

70,515. 00 

165. 52 




Total. 

884,298. 09 

881,029.58 

3,268. 51 



















































































50 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The excess of receipts over disbursements for the fiscal year 1922 was deposited in 
the Treasury subsequent to June 30, 1922. 

The United States Statutes at Larp:e, Fifty-second Congress, 1892, volume 27, 
chapter 171, page 153, provided that the register of wills retain from the fees and 
emoluments of his office his personal compensation and the necessary clerk hire and 
incidental expenses of that office. It further proAuded that “the surplus of such fees 
and emoluments shall be paid into the Treasury to the credit of the District of Colum¬ 
bia.” The register of wills was prohibited by this act from increasing the number of 
clerks and others employed in his office, except that additional copyists for temporary 
service could be employed, and was further proliibited from increasing salaries and 
compensation paid beyond that paid during the fiscal year 1891. 

The United States Statutes at Large, Fifty-sixth Congress, 1901, volume 31, chapter 
854, page 1209, gave the register of wills authority to “appoint and fix the number and 
the compensation of the employees of said probate court and office of register of wills: 
Provided, That anv expenditures incurred by him in so doing shall not be a charge 
upon the Public Treasury, but shall, together with his own compensation, be paid 
out of the revenues of the office of register of wills.” 

The United States Statutes at Large, Sixty-second Congress, 1912, volume 37, 
chapter 182, page 184, provided that on and after July 1, 1912, the surplus fees of the 
office of the register of wills were to be “paid into the Treasury of the Linited States 
to the credit of the United States and the District of Columbia in equal parts.” 

The amounts deposited in the Treasury as surplus fees have represented the excess 
of receipts over disbursements of the office. If the term ‘ ‘ surplus fees ” were construed 
to be based upon the revenues of the office, whether collected or not, consideration 
would have to be given to uncollected fees and to such properties of deposits collected 
as have not been fully earned at the end of a fiscal year. 

No record is maintained in the office of the total uncollected fees, and at our request 
the register of wills had prepared for us, from his files, a statement of such fees showing 
an aggregate of $12,032.75 outstanding at June 30, 1922. This statement indicates 
that these charges have accrued since the year 1909. The amount of $12,032.75, we 
are informed, is not fully collectible, but we were unable to obtain an estimate of the 
amount uncollectible. 

Deposits are required by the office from certain persons transacting business with it. 
The amounts represented by such deposits will either be earned by the office subse¬ 
quently or will be refunded. No record has been maintained by the office for the 
refundable deposits and unearned fees and at our request the register of wills had a 
statement of such items prepared as of the close of business June 30, 1922. This 
statement discloses unearned deposits of $2,371.10, of which $1,507.48 was collected 
during the fiscal year ended June 30, 1922. If this amount of $1,507.48 had not been 
included in the receipts for the fiscal year 1922 there would have been an excess of 
disbursements over receipts for that year of $1,341.96. This amount would be subject 
to reduction in respect of earnings and refunds during 1922 of deposits made in previous 
years, the effect of which, we are informed, would be comparatively negligible. 

Cash and other property representing the residue of certain undistributed estates is 
in the custody of the register of wills. The amount of cash on deposit at June 30, 1922, 
in the American National Bank of Washington, was $22,607.39. This amount was 
$13.24 in excess of the aggregate amount due to the undistributed estates as shown 
by the records in the office. We are informed that this difference has existed for some 
time prior to the year 1914. On September 28, 1922, the American National Bank of 
Washington allowed interest on this account to September 25, 1922, at 2 per cent per 
annum, retroactive to the opening of the account on October 13, 1919, amounting to 
$1,100.80. The bank has advised the register of wills that after September 25, 1922, 
the interest will be calculated and credited to this account monthly. The final dis¬ 
position of the amount of $1,100.80 and of interest to be credited to tne account in the 
future has been the subject of some discussion and we have suggested that steps be 
immediately taken to obtain a ruling from the proper department as to the disposition 
of this interest and that in the meantime such interest be not considered as a revenue 
of this office. 

The United States Statutes at Large, Sixty-first Congress, 1911, volume 36, chapter 
224, page 1083, reads, in part, as follows: 

“In every case in which the right to withdraw money so deposited has been adjudi¬ 
cated or is not in dispute and such money has remained so deposited for at least five 
years unclaimed by the person entitled thereto, it shall be the duty of the judge or 
judges of said court, or its successor, to cause such money to be deposited in the 
Treasury of the United States, in the name and to the credit of the United States: 
Provided, That any person or persons or any corporation or company entitled to any 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 51 


such money may, on petition to the court from which the money was received, or its 
successor, and upon notice to the United States attorney and full proof of right thereto, 
obtain an order of court directing the payment of such money to the claimant, and the 
money deposited as aforesaid shall constitute and be a permanent appropriation for 
payments in obedience to such orders.” 

The available records show that in conformity with that statute the register of wills 
has made deposits in the Treasury of the United States as follows: 


Mar. 6, 1915. 
Feb. 6, 1918. 
Feb. 24, 1920 
July 20, 1922. 


$1, 802. 74 
6,006.18 
1, 555. 59 
8 , 743. 84 


Total. 18,108.35 

The amounts deposited are exclusive of deductions of costs accrued and “poundage ” 
of 1 per cent, both of which are treated as a revenue of the office. 

The amount of $18,108.35 has been treated by the Treasury Department as receipts 
from the Department of Justice instead of receipts from District of Columbia sources. 

The property in the custody of the register of wills at June 30, 1922, other than cash 
consisted of a $100 Virginian Railway Co. 50-year, 5 per cent, series A, gold bond, due 
May 1, 1962, with interest coupons attached from and including November, 1916; 
United States of America war savings stamps, series of 1918, due 1923, of the principal 
amount of $15; and certain jewelry of an estimated value of $300. 

The disbursements of the office of the register of wills for the fiscal year ended 
June 30, 1922, are summarized as follows: 


Salaries.$66,355. 87 

Telephone. 560. 34 

Office supplies: 

Books. 680. 06 

Other. 1,574. 84 

Furniture and equipment. 264. 70 

Subscriptions, periodicals, etc. 214. 75 

Car fare, street railways. 206. 00 

Services, appraising estates. 177. 00 

Documentary stamps. 40. 00 

Miscellaneous. 441. 44 


Total. 70, 515. 00 

In the fiscal year ended June 30, 1912, the salaries aggregated $37,908.89, and the 
employees, including the register, numbered 31; in the fiscal year ended June 30, 
1922, the salaries amounted to $66,355.87, and there were 37 employees, including 
the register, at the end of that year. The increase in the number of employees was 
19.36 per cent, while the increase in salaries paid amounted to 75.04 per cent for the 
fiscal years in question. 

We noted that the semimonthly pay roll of May 15, 1922, was reduced $173.07 and 
that it carried the following notation: “Reductions of 5/15/22 made owing to decrease 
in receipts of office; to be restored to original salaries when funds warrant same.” 

Appropriations made by Congress for the office of the register of wills and not paid 
out of the receipts of the office are shown as follows: 

Fiscal year and purpose: 


1901, will books.$1, 999. 97 

1902, will books. 1, 995. 30 

1903: 

Will books. 2, 499. 92 

File cases. 1, 965. 00 

1904, card index. 2,486.80 

1905, metallic cases. 580. 90 

' • 1908, card index. 2, 965. 00 

1911, file cases.... 950. 00 


Total.^. 15,442.89 


From the data available we show below the percentage of increases in the receipts, 
and in the salaries paid, for the fiscal years ended June 30, 1906 to 1922, inclusive, 
over the receipts and the salaries paid during the fiscal year ended June 30,1905, and 






























52 FISCAL RELATIONS BETWEEN U. S. AND DISTRK.'T OF CX)LUMBIA 


the ratio of salaries paid to the receipts for the fiscal years ended June 30, 1905 to 
1922, inclusive: 


Fiscal years. 

Increase 
in re¬ 
ceipts 
over fis¬ 
cal year 
1905. 

Increase 
in sala¬ 
ries 

over fis¬ 
cal year 
1905. 

Ratio of 
salaries 
to re¬ 
ceipts. 

Fiscal years. 

1 

Increase 
in re¬ 
ceipts 
over fis¬ 
cal year 
1905. 

1 

Increase 
in sala¬ 
ries 

over fis¬ 
cal year 
1905. 

Ratio of 
salaries 
to re¬ 
ceipts. 


Per cent. 

Per cent. 

Per cent. 


Per cent. 

Per cent. 

Per cent. 

1905. 



89.23 

1914. 

55.70 

64.54 

94.29 

1906. 

10.78 

11.80 

90.05 ' 

1915. 

47.06 

51.48 

91.91 

1907. 

14.39 

16.94 

91.22 1 

1916. 

60.22 

62.93 

90.74 

1908. 

18.98 

23. 73 

92.78 

1917... 

70.18 

73.65 

91.04 

1909. 

13. 45 

16. 68 

91. 77 

1918. 

.59.62 

66.60 

93.13 

1910. 

24.28 

24.16 

89.13 j 

1919. 

82.02 

84.18 

90.29 

1911. 

38.13 

40. 65 


1920.■. 

103. 00 

101.30 

88.48 

1912. 

51.41 

56.50 

92.23 i 

1921. 

146. 61 

150. 83 

90. 75 

1913. 

52.11 

59. 95 


1922. 

160.36 

173. 95 

93.88 




93.82 I 



1 



The salaries of the register of wills and his first and second deputies at July 31, 
1911, and June 30, 1922, were as follows: 



July 31, 

June 30, 


1911. 

1922. 

Register. 

$4,000 

$4,000 

First deputy. 

2, .500 

8,100 

Second deputy. 

1,600 

2,400 


The practice of this office of paying into the Treasury of the United States its excess 
cash receipts at the end of each fiscal year results at the beginning of the new fiscal 
year in the office being without funds to meet its obligations. To overcome this con¬ 
dition, we are informed, certain employees have advanced sufficient of their personal 
funds to meet the needs of the office and later reimbursement has been made to them. 

The office of the register of wills is within the jurisdiction of the General Accounting 
Office, State and Other Departments Division. 

OFFICE OF THE RECORDER OF DEEDS. 


Following is a summary of the receipts, disbursements, and excess of receipts over 
disbursements, as shown by the available records in the office of the recorder of deeds, 
exclusive of certain suspensions and disallowances included in Exhibit A as receipts, 
for the calendar years 1893 to 1898, inclusive, and the fiscal years ended June 30, 1899 
to 1922, inclusive: 



Receipts. 

Disburse¬ 

ments. 

Excess of 
receipts 
over dis¬ 
burse¬ 
ments. 


Receipts. 

Disburse¬ 

ments. 

Excess of 
receipts 
over dis¬ 
burse¬ 
ments. 

Calendar year; 

1893 . 

1894 . 

$33,504.33 
29,550. 58 

$24,908.51 
23.152. 52 

$8,595. 82 
6,398.06 

Fiscal year— 
Continued. 
1909. 

$39,713.77 
42,995. 32 

$28,777.10 
30,629.02 
34,354.93 
33,136.95 
32,963.12 
31,476.15 

$10,936.67 
12, .366.30 
9,082. 87 
12,851.60 
12,99.5.72 
6,683.33 

1895. 

29,006.03 

23 ; 015.16 
21,861. 83 

5,990. 87 

1910. 

1896. 

24,779.30 

2,917.47 

1911. 

43,437. 80 
45,988.55 

1897. 

24; 813.15 

22,414. 45 

2,398.70 

1912 . . 

1898. 

22 ; 467.95 

21,406.92 

1,061.03 

1913. 

45 ; 958. 84 

Fiscal year: 




1914. 

38; 159. 48 

1899. 

12,568. 40 

11,821.10 

747.30 

1915. 

38,066.60 

27,516.98 
30,785.26 
40,127.28 
41,102.10 
47,178. 78 
58,109. 92 
66,794.87 
75,767. 96 

lO; 549.62 
9,140.02 
21,691.62 
5,595.72 
10,952.13 
27, .55.5.17 
12,033.73 
20,130. 48 

1900. 

23,118. 05 

22,145. 42 

972.63 

1916 . . 

39,925. 28 

1901. 

23 ; 7.32.90 

23,540.92 

■191.98 

1917 .... 

61,818.90 

1902. 

24,235.65 

23,460.74 

774.91 

1918 . 

46 697. 82 

1903. 

23 ; 686. 65 

22,632. 84 

1,053. 81 

1919 .... 

58,130.91 
85 665. 09 

1904. 

28,131.95 

25,094.31 

3,037.64 

1920 . 

1905. 

:i2;774.18 

26,589.28 
26,204.07 

6,184.90 

1921.. 

78,828.60 

1906. 

34,819.10 

8,615.03 

1922 . 

95 898.44 

1907 

36,002.30 
34,902. 85 

26,257. 46 
27, 0 : 11 .63 

9 744. 84 



1908. 

7,871.22 

Total. 

1,199,378. 77 

950,2.57. 58 249,121.19 

















































































































PISCAI^ RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 53 


The amount of $20,130.48, representing the excess of receipts over disbursements 
for the fiscal year 1922, was deposited subsequent to June 30, 1922. 

The appropriations made by Congress for this office and not included as disburse¬ 
ments of the office are summarized as follows: 


Fiscal year and purpose: 

1901, book typewriters. $3, 500. 00 

1905, book typewriters. 9, 823. 78 

1907, book typewriters. 2,150. 00 

1918, book typewriters. 5, 409. 00 


Total. 20,882.78 


The rent paid for the premises occupied by the office, amounting to $6,000 a year, 
is also not included in the disbursements of the office, being appropriated for by 
Congress. 

The fees for work to be performed by this office are collected in advance. At June 
30, 1922, such advance collections aggregated $45,094.35. Of this amount, it is esti- 
mated that $22,790.70 would be required to pay the salaries to complete the work 
of the copyists and for comparing, etc. At October 14, 1922, the payments still to 
be made for salaries to complete the work collected for in advance at June 30, 1922, 
was approximately $12,223.36. 

The amounts deposited in the Treasury as surplus fees have represented the excess 
of receipts over disbursements of the office. If the term “surplus fees” were con¬ 
strued to be based upon the revenues of the office for work done in the year, rather 
than the collections for the year, consideration would have to be given to such pro¬ 
portions of advance collections as have not been fully earned at the end of the year. 
The following shows the result of operations of the office for the fiscal year ended June 
30, 1922, upon the basis of fees actually earned and after charging the rent paid for 
the premises occupied by the office; 

Excess of receipts over disbursements paid into the Treasury of the United 


States.$20,130.48 

Fees collected in advance at June 30, 1921. 28, 723. 30 


Total. 48,853.78 

Fees collected in advance at June 30, 1922. $45, 094. 35 

Rent for fiscal year ended June 30, 1922. 6, 000. 00 

- 51,094.35 


Apparent operating loss... 2, 240. 57 


No record of fees collected in advance or the liability for salaries on uncompleted 
work is maintained by the office. 

The disbursements of this office for the fiscal year ended June 30, 1922, are summa¬ 
rized as follows: 


Salaries: 

Annual basis, including bonus. $13, 660. 00 

Per diem basis, including bonus. 20, 300. 26 

Copvists. at 40 per cent. 29, 820. 22 

- $63, 780. 48 

Telephone. 128. 39 

Furniture and equipment. 6, 806. 85 

Record books and binders. 2,140. 40 

Stationeiy and printing. 446. 61 

Car fare, street railways. . 27. 80 

Office expenses and supplies. 1, 822. 43 

Postage. 75.00 

Repairs to record books. 540.00 


Total... 75.767.96 


The United States Statutes at Large, Fifty-second Congress, 1892, volume 27, chapter 
171, page 153, provided that the recorder of deeds retain from the fees and emoluments 
of his office his personal compensation and the necessary clerk hire and incidental 
expenses of that office. The recorder was prohibited by this act from increasing sal¬ 
aries and compensation paid beyond that paid during the fiscal year 1891. Acting 
Under a decision of the Comptroller of the Treasury, certain employees working on an 
annual and per diem basis, at an annual salary of $2,500 or less, have been paid a 
































54 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


bonus from the receipts of this office as is paid to other United States and District of 
Columbia employees in accordance with an act of Congress. 

The office of the recorder of deeds now occupies the first four floors of the seven-floor 
building known as the Century Building, located at 412 Fifth Street NW. The space 
available for the work ol the office is inadequate. Certain volumes containing the 
land records of the District must be allowed to remain over night on tables because 
of the lack of space in the steel cabinets. We are informed that certain space has been 
assigned to and for the use of representatives of certain title companies, a daily news¬ 
paper, and the collector of taxes. The deputy recorder, we are informed, acts as a 
commissioner of corporations in additioT to his other duties. 

The receipts of the office are deposited daily in certain national banks in Wash¬ 
ington subject to the order of the recorder or his deputy. 

The salaries of the recorder of deeds and the deputy recorder, at June 30, 1901, 
and June 30, 1922, were as follows: 



1901 

1922 

Recorder. 

$4,000 

2,500 

$4,000 

2,740 

Deputy recorder. 



The practice of this office in paying into th Treasury of the United States its excess 
cash receipts at th ■; end of each fiscal year results in the office being without working 
funds at the beginning of the next fiscal year. We are informed that in instances 
where the receipts in the early part of the fiscal year are not sufficient to maintain 
the regular number of copyists, etc., the force is reduced, notwithstanding the large 
quantity of work on hand that has been paid for in advance. 

The office of the recorder of deeds is under the jurisdiction of the General Account¬ 
ing Office, State and Other Departments Division. 

Respectfully submitted. 


Haskins & Sells. 















Exhibit A.— The District of Columbia general fund—Summary of balances on deposit in the United States Ti'easury, receipts, disbursements, and 
payments and reimbursements to the United States, by years and in total, for the 11 fiscal years ended June 30, 1912 to 1922, inclusive. 


EISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 55 


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58 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


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FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 59 ' 


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Schedule No. 1 .—Statement of receipts from District of Columbia sources for account of the District of Columbia and the United States, by years and 

in total, for the eleven fiscal years ended June SO, 1912 to 1922, inclusive —Continued. 


64 


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66 


riSCAL, RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


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68 


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FISCAL, RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 73 

































































































Schedule No. 2. —Statement of disbursements^ charged proportionally to the District of Columbia and the United States, by years and in total, for 

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Schedule No. 2, —Statement of disbursements, charged proportionally to the District of Columbia and the United States, by years and in total, for 

the eleven fiscal years^ ended June 30, 1912 to 1922, inclusive —Continued. 


76 


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Schedule No. 2. —Statement of disbursements, charged 'proportionally to the District of Columbia mid the United States, by years and in totals for 

the eleven fiscal years ended June SO, 1912 to 1922, inclusive —Continued. 


78 


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FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 79 


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Schedule No. 2 . Statement of disbursements, charged proportionally to the District of Columbia and the United States, by years and in total, for 

the eleven fiscal years ended June 30, 1912 to 1922, inclusive —Continued. 


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edical treatment of de 


FISCAL REI.ATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


85 














































¥ 


/ 




SYNOPSIS OF REPORT OF HASKINS & SELLS. 


Baltimoee, January 17, 1023. 

Hon. Lawkence C. Phipps, 

Chairman Joint Select Congressional Committee, 

United States Senate. 

Dear Sir : Under date of January 11, 1923, we made a report to you cover¬ 
ing our examination of the fiscal relations between the United States of Amer¬ 
ica and the District of Columbia for the 11 fiscal years ended June 30, 1912 to 
1922, inclusive. We submit below a synopsis of items covered in that report 
which may be considered as having a bearing upon the available portion of the 
bahiiice in the general fund to the credit of the District of Coliinib.a at -iune 30, 
1922. 

Direct deductions from this balance are the amounts of unexpended appro¬ 
priations and the amounts of collections which are specifically designated 
as payable in the future. The report of the District auditor for the fiscal year 
ended June 30, 1922, shows obligations of this character at June 30, 1922, aggre¬ 
gating $2,903,219.93. The component items of this amount are shown on page 6 
of our report. 

In our opinion the general fund should be charged with $545,484.54, as 
follows: 

Redemption of District 5 per cent bonds issued under the act of 
Congress approved June 10, 1879 (exclusive of participation in 
interest payments and premiums paid on redemption), charged 
against the United States in violation of provisions of the act of 
Congress, as shown on page 44 of our report (50 per cent of 


$1,092,300)_ $546,150. 00 

Less adjustment of errors as enumerated on page 34 of our report- 665.46 


Remainder 


545,484. 54 


The following items relate to revenue and expenses affecting the District 
regarding which it appears that the allocation as between the United States 
and the District can be questioned on the ground of inconsistency but not on 
the ground of failure to comply with act’’ons of Congress. 

As shown on page 38 of our report, increases in compensation of certahi em¬ 
ployees have been charged wholly against the appropriations of departments 
of the United States Coveriiinent, while the regular compensations other than 
the increases, have been charged pi-oportionally against the LTnited States and 
the District. The la-oportion of these increases corresponding to the District’s 
]>roportions of the regular compensafon of the employees amounts to $191,890.35. 


As shown on page 38 of our report, the cost of additional land for the 
National Zoological Pai-k was paid Lu' entirely by the United States, whereas 
the cost of land i)reviously p\irchased for this ])urpose was divided propor¬ 
tionally between the United States and the District. Distribution of the addi¬ 
tional cost would result in the District being charged as follows: 


50 per cent of $80,000_$40, 000 

60 per cent of $2,500__ 1,500 


Total_ 41, 500 

As shown on page 37 of our report, the amount of $634.33 was paid out of 
revenues of the Ignited States for the relief of Eldred C. Davis to make good 
the loss occasioned by a larceny from the office of the collector of taxes of 
the District. It may be considered that, as the entire amount of taxes is 
credited to the District, the whole of th's amount should be charged to the Dis¬ 
trict, or that 50 per cent, $317.16, should be charged to the District. 

As shown on page 49 of our report, the entire amount of collections subse¬ 
quent to June 30. 1878, of taxes uncollected at that date was deposited to the 

87 









88 FISCAL P.ELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


credit of tlie District. As the United States assumed 50 per cent of the debt 
of the District outstanding at .Time 30, 1S7S, it may be considered that the 
United States should be credited with 5() per cent of tlie s\d)se(pient collections 
of taxes uncollected at that date; 50 per cent of the amount collected would be 
^811,309.87. 

As shown on page 30 of our report, certain receipts from licenses, privi¬ 
leges, etc., during the fiscal years from 1912 to 1922, inclusive, were deposited 
wholly to the credit of the District. Distribution of the total of such receipts, 
amounting to $0,300,058.57, between the United States and the District in the 
proportions in which certain other receipts were distributed in the respective 
years would result in a charge to the District and credit to the United States 
of $2,933,441.13. 

As shown on pages 30 and 37 of oui- report, certain pay and allowances to 
United States Army officers, rendering services to the District, were charged 
wholly to the United States. Distribution of the total of $282,422.18 between 
the United States and the District, in the proportions of expenses borne by 
each during the respective years, would result in a charge to the District and 
a credit to the United States of $151,404.79. 

As shown on page 30 of our report, certain collections made by the clerk 
of the Supreme Court of the District are deposited in the Treasury wholly to 
the credit of the United States. The amount thereof (shown in Schedule No. 1) 
is $175,878.99. If this amount were distributed between the United States and 
the District in the same proportions ns were certain other receipts in the 
respective years, the result would be a credit to the District and a charge to 
the United States of $80,933.38. 

Any of the foregoing items which are not deemed by the committee to be 
adjustable may nevertheless be interesting in their bearing upon future legis¬ 
lation affecting fiscal relations between the United States and the District. 

Certain of the items referred to in the foregoing synopsis would be affected by 
transactions prior to July 1, 1911. In order to complete the inquiry into such 
questions it would therefore be necessary that the examination be extended 
prior to July 1, 1911, so as to cover the entire period comprehended by the act 
creating your committee. 

Respectfully submitted. 

Haskins & Sells. 


Supplemental Report of Haskins & Sells. 

Baltimore, January 23, 1923. 

Hon. Lawrence C. Phipps, 

Chairman Joint Select Congressional Comnvittee. 

United States Senate. 

Dear Sir: In accordance with your request, M'e tersely summarize below, 
from letters addressed to your committee, the views of the auditor of the 
District, the representatives of the United States General Accounting Office 
and of the Department of Justice, and the citizens joint committee, regarding 
certain items comprehended by our report to you dated Januaiy 11, 1923, in 
connection with the fiscal relations between the United States and the Dis¬ 
trict of Columbia: 

Uncollected taxes of $1,622,739.75, on June 30, 1878 (submitted by us to the 
committee for its consideration). 

District auditor: That the United States has no valid claim to these taxes. 

Representative General Accounting Office: That in equity this amount 
should be applied to liabilities of the District accrued before the United States 
began to share in the expenses of the District. 

Representative Department of Justice: That the taxes were deposited to 
the credit of the District in accordance with the law. 

Citizens joint committee: That the taxes were properly credited to the 
District. 

Receipts from licenses, privileges, etc., $6,300,058.57, deposited wholly to the 
credit of the District (submitted by us to the committee for its consideration). 

District auditor: Certain legislation and controlPng decision are quoted 
in support of contention that the receipts were properly deposited. 

Representative General Accounting Office: That the special reimbursable taxes 
collected be apportioned as certain other receipts were apportioned in the years 
affected ; other items to be allowed to stand as deposited. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 89 


Representative Department of Justice: That the receipts have been deposited 
in accordance with the law. 

Citizens’ joint committee: That the United States is not entitled to any part 
of these receipts. 

Army officers’ pay and allowances, $282,422.18, paid by the United States 
(submitted by us to the committee for its consideration). 

D..strict auditor: That Congress has never required the District to participate 
in such expenditures. 

Representative General Accounting Office: Inability to make any recommen¬ 
dation. 

Representative Department of Justice: That question is legally settled. 

Citizens’ joint committee: That nothing is due to the United States by the 
District on this account. 

Increased compensation, $191,890.35 (submitted by us to the committee for 
its consideration). 

District Auditor: Decision left to the committee. 

Representative General Accounting Office: That the amount of $191,890.35 be 
now charged against the District. 

Representative Department of Justice: That there would seem to be no 
violation of law in the way the charge was made. 

Citizens’ joint committee: No recommendation. 

Appropriations of $80,000 and $2,500 for purchase of land in connection with 
the National Zoological Park (submitted by us to the committee for its con¬ 
sideration). 

District Auditor: Decision left to the committee. 

Representative General Accounting Office: That 60 per cent of the cost of the 
land be charged to the District. 

Representative Department of Justice: That the question has been legally 
sttctled by Congress. 

Citizens’ joint committee: That the District should not be charged. 

District 5 per cent bonds, $1,092,300 (recommended by us that the District 
be charged with the amounts paid by the United States on account of interest 
and redemption of these bonds). 

District auditor: No specific recommendation, but refers to the fact that 
annual appropriations by Congress during the existence of these bonds pro¬ 
vided for interest payments and retirement. 

Representative General Account.ng Office: No recommendation. 

Representative Department of JusRce: Question legally settled. 

Citizens’ joint committee: That Congress ignored conditions-in the act author¬ 
izing the issue of these bonds by subsequently appropriating for interest and 
sinking fund. 

Certain errors in stating account between the United States and the District 
of Columbia (recommended by us that net amount of $665.46 be credited to the 
District). 

District auditor: No recommendation. 

Representative General Accounting Oftice: Recommends adjustment. 

Representative Department of Justice: Recommends adjustment. 

Citizens’ joint committee: No recommendation. 

Relief of Eldred C. Davis, $634.33 (submitted by us to the committee for its 
consideration), 

District auditor: No recommendation. 

Representat ve General Accounting Office: That one-half of the amount, or 
?31T.17, be now charged to the District with interest from the date of the 
relief act. 

Representative Department of Justice: No recommendafon. 

Citizens’ joint committee: That the District has no interest in this matter. 

Certain collections made by the clerk of the Supreme Court of the District, 
$175 870.99 (submitted by us to the committee for its consideration). 

District auditor: That the District has a clear equity in these collections. 

Representative General Accounting Office: Recommends apportionment be¬ 
tween the United States and the District of collections subsequent to June 30, 
1922. 

Representative Department of Justice: No recommendation. 

Citizens’ joint committee: No recommendation. 

Respectfully submitted. 

Haskins & Sklt.s. 


32894—S. Doc. 301, 67-4 


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REPORT OF DANIEL J. DONOVAN, AUDITOR OF THE DISTRICT 

OF COLUMBIA. 

January IT, 

Hon. Lawkknce C. Thifps. 

('hainntoi Joint Select Comniittcc, i'nitcd Senate. 

Hear 8ir : I have the honor to .acknowledge the receipt of your letter of 
January H, and a copy of the reiiort snhinitted to you by Haskins (S: Sells, 
the accountants employed by your committee for the purpose of conducting the 
investigation into the accounts between the United States and the District of 
(.’olumbia. You ask me to give the committee the benefit of my views on this 
report not later than the 18th instant, and you inform me that an opportunity 
Will be afforded me at an early date to discuss the report orally with the com¬ 
mittee. For this latter reason I shall not attemiit at this time to enter upon 
extended arguments concerning certain matters biought out by the accountants, 
but will submit my views as briefly as the importance of each sub.iect shall 
warrant. 

'The outstand.ng and i-eally imiiortant feature of the entire I'eport is the hnd- 
ing by the accountants of tlie existence of certain moneys in the Treasury of 
the United States on June oO. 1922, properly belonging to ami <lue the Disti'.'ct 
of ('olumbia, free of all fixed obligations, amounting to .$5,502,061.34. This 
fimiing by the accountants completely supports and proves the correctness of 
the contention of the District of Columbia that it had such sur])lus reveniu's 
in the Treasury. 

The re))ort of the accountants goes into varying detail and stresses those 
financ’al transactions in which the eipiities would appear to favor the United 
Stiites, but it is sign ticant that the report .gives practically no consideration 
to any transactions in which the equities would appear to favor the District of 
('olumbia. Tn this respect the present accountants seem to have fdlowed in 
the footstei)s of those employeil by congressional committees in conducl ng 
similar investigations in the past. 

The accountants fail to set up, for instance, that to June 30, 1922, the Distr ct 
has paid entirely from its own revenues appropriations aggregating .$4,198.- 
608..39. notwithstanding the fact that Congress, under the organic act, agreed 
to share in such appropriations. 

The accountants fail to show that the United States had paid no part of 
.$3,005,672.85 expended in the payment of pensions and other allowances to 
retired members of the police and fire departments and to families of deceased 
members. 

The accountants fail to show that tlu' Federal (Tovernment pays nothing 
whatever for water consumed by it. and that this cost is met from the pockets 
of the people of Washington ; and, further, that of the entire cost of the main¬ 
tenance, o])eration. extension, and improvement of the water system to .Tune .30, 
1922, totaling .$.32,312,346.74, only .$8.8.30.028..38 has been derived from the 
iwenues of the United States, 

The accountants fail to show, other than by a four-line reference to the 
subject, that while the District paid one-half of about .$900,000, the cost of 
1 'econsti‘ucting the courthouse, and for years paid 50 per cent of the salaries 
and expenses of the Supreme Court of the District, and is now paying 60 per 
cent of such appropriations (the appropriations for the current year amount¬ 
ing to .$204,6.57), the United States receives credit for all fees, hues, forfeit¬ 
ures. collaterals, and costs collected in that court. 

There are other items favoring the District which might have been presented 
by the accountants for the consideration of the committee, including a one-half 
credit in .$4.3,120. the amount offered to and awepted by the commissioners for 
the Ai-thur School property more than seven years ago, this property being 
included within the taking lines for the extension of the Capitol Grounds. 

All these matters are at least entitled to consideration by the committee, as 
much so as those items set up by the accountants in favor of the United States. 

The report of the accountants is prepared with chapter designations. The 
several chapters will be considered in order. 


91 


92 FiSCAL RELATIONS BETWEEN IT. S. AND DISTRICT OF COLUMBIA. 


GENERAL. 

(Pp. 31 to 34.) 

On paj?e 32 of tlie report is reproduced a certificate of tlie Comptroller Gen¬ 
eral’s office sliowing a balance of $8,130,574.44 in the Treasury of the United 
States on June 30, 1922, due the District of Columbia. This total is made up 
of a balance in the general fund of $7,574,410.90 and $502,157.54 belonging to 
certain special and trust funds of the District. This latter amount doe.s not 
enter into the question of surplus revenues of the District. The following 
comments, therefore, deal with the general-fund balance. This fund is made 
up of moneys paid into the Treasury derived from taxes, privileges, and mis¬ 
cellaneous revenue items and represents the revenue proper of the District of 
Columbia available for appropriation purposes. 

The accounts call attention—on page 33—to a discrepancy of $5,260.G7 be¬ 
tween the general fund balance certified by the Comptroller General’s office on 
.Tune 30, 1922, and that shown by the general ledger in the office of the auditor 
of the District of Columbia, the District claiming a balance of $7,.579,677.57, 
as against $7,574,416.90 found to be due the District by the Comptroller Gen¬ 
eral. Th’is difference, which had not been located at the time of closing the 
ledger for the fiscal year ended June 30, 1922, has since been reconciled in part, 
so that at this time the Comptroller General’s office has increased its balance 
to the credit of the general fund to $7,580,454.05, thus leaving a discrepancy 
of only $704.28. Efforts are still being made to locate this latter difference, 
which arises solely through the present system of divided responsibility in 
the expend ture of District appropriations. 

The accountants—on page 33 of the report—reproduce a statement prepared 
by the auditor of the District of Columbia shoMung that the only fixed obliga¬ 
tions against the general fund balance on June 30, 1922, were the unexpended 
balances of appropriations, the District’s liability for which amounted to 
$2,077,616.24, leaving free and unencumbered surplus revenues to the credit 
of the District in the Treasury on that date of $5,502,061.34. But from this 
amount the accountants, again using fixiires of the auditor of the District, 
deduct $825,603.69, arising as the result of certain items treated in one fiscal 
year for tax rate purposes and in another year for accounting purposes, thus 
giving the District a net free surplus on that date of $4,776,457.65, subject to 
an unlocated difference of $890.25. 

In view of the fact that the investigation by your committee does not 
extend beyond June 30, 1922, it is submitted the only item your committee 
should deal with in establishing the actual free and unencumbered surplus 
to the credit of the District on that date is $5,502,061.34, as the transactions 
embraced in the item of $825,603.69, will take place partly in the fiscal year 
1923 and partly in the fiscal year 1924. 

As far as the report deals with the balance to the credit of the general fund 
of tlie District on .Tune 30, 1922. it substantially verifies and proves the cor¬ 
rectness of the statement of account made by the Comptroller General’s office 
of the fiscal relations hetween the United States and the District of Columbia 
to June 30, 1922. as well as the ledger accounts of the office of the Auditor of 
the District of Columbia. 

The accountants (page 32 of the report) state that they accepted at the 
starfng point of the investigation, .Tuly 1, 1911, a balance owing the United 
States by the Disti’ict of $2,665,081.81. This was the balance certified to be 
due at that time by the And’tor for the State and Other Departments (since 
merged ’nto the General Accounting Office), the auditor for the District, and 
later verified as correct hy the Mayes investigation. 

The accountants (on page 32 of the report) invite attention to certain credits 
treated as cash hy the D’stia'ct, amouning to $351,412.90. arising from what are 
termed “ drawback ce'-tificates.” These certificates, as stated by the accountants, 
were issued under authority of an act of Congress approved June 27, 1879, in 
instances where special improvement assessments made prior to June 19, 1878, 
ha'l been found to be excessive or erroneous. That act permitted the acceptance 
of these certificates in the payment of taxes for certain years, and a later act of 
Congress al)pro^•ed July 9, 1886, provided that all such cerUficates theretofore or 
thereafter received in payment of general taxes should be considered as money 
and eredited to the District as such. The District did here merely what Con¬ 
gress expressly gave it the right to do, yet the accountants set up'the total of 
.$.351 412.90 in drawback certificates credited to the District as cash between 
1879 and 1900, as an inferential injustice to the United States, and one that 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 93 


now be corrected by charging that sum back aganist the District. This 
whole question of tlrawback certificates was fully considered in the Mayes 
report, and as Congress, on the basis of that report, required no reimbui’sement 
from the IRstrict to the United States, it is fair to assume the committee in 
charge of that investigation rejected any recommendation seeking to accomplish 
that result. 

The accountants (on page 34 of the report, and again on page 49) refer to 
the uncollected taxes owing the District on July 1, 1878, when the present 
form of government came into hehig. Such taxes, including penalties, are 
reported by them as having been collected and credited to the District on and 
after July 1, 1878, in the sum of $1,022,739.75. The inference here again is that 
the United States has an ecpiitable consideration in this sum, apparently on 


the assumption that tlie United States under tlie terms of the organic act agreed 
to pay 50 per cent of appropriations of the District on tlie basis of moneys 
accruing and collected on and after July 1, 1878, and that any money owing 
the District prior to that date Imt thereafter collected could not be set up 
against the contribution by the United States. This is another matter very 
’ fully covered in the IMayes report and with the question of drawback certiti- 
cates is merely a rehash of those subjects in the report of the present accountants. 
The accountants overlook the very material fact that as a result of the Mayes 
and Spalding reports Congress required the District to transfer from its 
revenues to the credit of the revenues of the United States $2,444,148.14, of 
which amount the sum of $1,009,072.73 represented reimbursements to the 
ITnited States on account of loans to the District between 1874 and 1878. The 
uncollected taxes on July 1, 1878, would properly be subject to such reimburse¬ 
ments as a set-off. Moreover, the Comptroller of the Treasury has considered 
this particular feature of ths accountants’ report in a very able and exhaustive 
decision. (See 21 Comptroller's Decisions, p. 403.) 

In the Mayes report the following statement is made: 

“ On July 1, 1878, there was due the District of C’olumbia from the taxi)ayei’s, 
on account of unpaid taxes, nearly $1,500,0(X), of which sum about 70 per cenc 
was due for taxes for the fiscal years 1875 to 1878, inclusive. Hundreds of thou¬ 
sands of dollars of this sum were afterwards collected by the District oflicials 
and paid into the Treasury of the United States to meet that 50 per ceiir 
of expenses of the District of Columbia for the fiscal years 1879 to 1911, in¬ 
clusive, which expenses Congress, in the act of June 11, 1878, said should be 
met from taxes thereafter levied and assessed upon the taxable property ami 
privileges of said District, and not from taxes theretofore so levied and 


assessed.” 


In commenting on this statement the comptroller says : 

‘‘ Page 05 of the record shows further that $361,768.11 of these back taxes 
was collected during the fiscal year 1879, of which $346,676.49 was collected 
on account of taxes levied for the fiscal years 1875 to 1878, inclusive. No other 
specific collection of these back taxes is shown, though the accountants have 
stated generally that hundreds of thousands of dollars were in fact collected, 
nor does the report show the amount of the District’s fioating indebtedness our- 
standing on July 1. 1878, which was subsequently paid. It is not in reason t(> 
assume that all of the fioating indebtedness incurred prior to July 1. 1878, 
bad been paid prior to that date, and that, as suggested by the accountants, 
all amounts collected after said date for taxes due prior thereto were applied 
to the expenses of the District estimated under the half and half plan of the 
organic act. 

“ So far as I am advised it is not possible to ascertain the exact amount of 
taxes assessed and due but not paid on June 30, 1878, which have subsequently 
been collected and paid into the United States Treasury, nor is it possible to 
ascertain how much of the expenses of the District incurred prior to July 1, 
1878, have been paid since said date, and how much, if any, of such payments 
has been charged to appropriations of Congress, and how much has been charged 
to the District revenues. 

‘‘ If these facts could be ascertained and they should disclose an excess of 
revenues collected since June 30, 1878, on account of taxes then due and unpaid 
over payments made since that time on account of expenses incurred on or 
before said date, such balance would, in my opinion, be properly chargeable 
with any indebtedness still due on account of said expenses, including advances 
made by the United States to pay the interest on the 3.65 bonds. If, in fa(*t, the 
acts in question impose on you the duty or grant to you the power to reimburse 
the Treasm-y of the United States out of District revenues, you would then. 


94 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


no doubt, have authority to apply said balance, or so much thereof as mij^ht be 
necessary, after proper proportional credit to the District, to reimbursing the 
United States for advances made under the terms of the said acts. 

“ I am given to understand, however, that because of lapse of time, and insuffi¬ 
cient or incomplete records of the fiscal operations of the District, it is not now 
possible to segregate the old revenues and expenses from the new; and it is 
therefore impossible to ascertain the amount of any balance of old revenues 
which may exist, or to ascertain with certainty that there is any such balance.” 

And in tlie same decision the following very pertinent observation is made l>y 
the comptroller: 

” And then there is very reasonable ground for assuming that when Con¬ 
gress passed the act of 1878. the organic act, it intended to wipe the slate clean 
so far as the antecedent period of uncertainty was concerned and take a fresh 
start. Legislation during the period between the acts of 1874 and 1878 had not 
been after any determined or systematic plan. The necessities of the District 
had been met as circumstances for the time being seemed to require. The 
nearest approach to a plan seems to be found in an apparent intention to re- , 
quire the application of District revenues to District needs and to furnish from 
the Federal Treasury whatever additional might be required. The organic act 
took no account of and made no provision for the payment of any indebtedness 
growing out of the transactions of the preceding four years between the Govern¬ 
ment and the District, and that condition was permitted to continue for 35 
years. But while these conditions may in a measure tend to support a con¬ 
tention that the debt, if existent, had been released. I do not find in them 
justification for so holding.” 

It is very clear from what is said that the United States has no valid claim 
to Miiy part of the uncollected taxes on .Inly I, 1878. 

INTEREST ON ADVANCES. 

(pp. 34 to 35.) 

No comment is made on this chapter at this time, as the matters i)re.sented 
are consummated transactions. The question of the allowance of interest on 
balances to the credit of the general fund of the District is referred to. but 
it is understood the entire subject of interest is one to be taken up by the 
committee. 

PURCHASE OF CONSTRUCTION MATERIAL. 

(P. 35.) 

Nothing contained under this caption bears directly upon the real purpose 
of the investigation. The entire chapter is merely a criticism of the present 
bookkeeping and administration in the office of the purchasing officei- in the 
handling and issuance of construction materials. 

TRASH REDUCTION PLANT. 

(P. 35.) 

This chapter deals with the failure to transfer on or before June 30, 1922, 
certain moneys derived from the operation of the trash reduction plant from 
the miscellaneous trust funds account to the revenues of the United States and 
the District. Such moneys were transferred on August 31, 1912. The moneys 
whether in one account or the other are always in the Treasury and the ad¬ 
justments merely involve transfers between different funds and "the necessary 
bookkeeping entries. This matter is only pertinent to the investigation to 
the extent that had the transfer of moneys been made on or before .Tune 30. 
1922, the District’s general fund balance would have been increased bv slightlv 
over $12,000. ^ ‘ 

DISPOSITION OF CERTAIN RECEIPTS. 

(P. 36.) 

In this chapter the accountants direct attention to receipts from certain 
licenses, privileges, etc., collected and deposited in the Treasurv wholly to the 
credit of the revenues of the District, and show that for the fiscal years 1912 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 96 


to 1922, inclusive, such receipts amounted to $6,300,058.57. The accountants 
say: 

“ If these collections for the years 1912 to 1922, and those prior, had been 
apportioned as were certain other receipts from District sources, the balance 
in the general fund at June 30, 1922, would have been considerably less.” 

This is a most important subject, primarily because of the great amount of 
money involved, on the basis of such collections since July 1, 1878, and, further, 
because of the very plain intimation by the accountants that all such moneys 
should have been divided between the United States and the District, instead 
of the District taking all. To prove the right of the District to moneys of this 
kind it is necessary to consider certain legislation and controlling decisions. 

The organic act required the commissioners to submit to the Secretary of the 
Treasury, on or before October 15 of each year, estimates of the amount neces¬ 
sary to defray the expenses of the government of the District for the next 
fiscal year. The act declares that— 

“ To the extent to which Congress shall approve of said estimates Congress 
shall appropriate the amount of 50 per cent thereof, and the remaining 50 per 
cent of such approved estimates shall be levied and assessed upon the taxable 
property and privileges in said District other than the property of the United 
States and the District of Columbia.” 

Under the terms of the organic act the District, commencing with July 1, 
1878, claimed and beneficially received credit for the entire amount of all mis¬ 
cellaneous revenues, and this was the rule of action, concurred in by the ac¬ 
counting officers of the Treasury and established by definite and controlling 
decision, until the passage of the District appropriation act for the fiscal year 
1889 (approved July 18, 1888), when Congress for the first time by specific 
legislation commenced to deprive the District of the entire credit to certain 
of such revenues. By legislative provisions adopted from time to time through 
the years from 1888 until the present Congress gradually provided for the 
distribution between the United States and the District of all but 17 of 61 
items of miscellaneous revenue. Forty-seven of these items on and prior to 
June 30. 1922, were credited in proportions of 50-50 or 60-40 betw’een the Dis¬ 
trict and the United States. The remaining 17, which the District received 
entire credit for, are now the subject of a report pending before the Comptroller 
General of the United States for his decision as to whether such items are 
affected by the legislation contained in the District appropriation act for 1923, 
requiring all revenues received by the District on and after July 1, 1922, de¬ 
rived from any activity or source appropriated for by both the United States 
and the District to be divided between the two in the same proportion that each 
contributed to the activity. The purpose of this legislation is to require cer¬ 
tain revenue items which have not been included by specific enumeration in 
prior legislation for division between the United States and the District to 
be credited in part to tiie United States. The legislation, however, is very 
clearly prospective in its operation. For the information of the committee I 
am forwarding herewith a copy of my report of November 6, 1922, referred 
to by the accountants, which is now before the Comptroller General for 
decision; also a memorandum of the several laws passed by Congress between 
1882 and the present time relating to the collection and division of various 
items of revenue of the District. 

An important point it is desired to emphasize is that in each of the many legis¬ 
lative provisions for the division of certain receipts between the United States 
and the District (see memorandum referred to) Congress has specifically defined 
and named the classes of moneys subject to such division. Under the accepted 
rule of statutory construction those classes of moneys not included in the 
enactments continued to remain the entire property of the District. This is 
the rule of law followed by the accounting officers of the Treasury, including 
the Comptrollers of the Treasury, and more recently the General Accounting 
Office, and has been the rule since the beginning of the present form of govern¬ 
ment in the District in 1878. And the fact should not be overlooked that the 
act in every instance in crediting receipts in the Treasury and upon the books 
of the Treasury, either wholly to the District or partly to the United States and 
partly to the District, is the act of the accounting officers of the Federal Govern¬ 
ment. It is but a reasonable presumption to hold that those officers would use 
every proper means to see that the legal rights of the United States in the ap¬ 
plication of such receipts were fully protected. 

Judge Lawrence, first Comptroller of the Treasury, in a decision rendered on 
August 24, 1882, four years after the passage of the organic act, referring to the 


96 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


ownership of fines collected in the police court (one of the items credited wholly 
to the District), says: 

“ Fines imposed by the police court belong to the revenues of the District, but, 
by force of the statutes, are to be paid into the Treasury of the United States, 
and can only be paid out by authority of an appropriation act.” 

And in another decision, rendered April 25, 1884, Judge Lawrence, referring to 
section 4 of the organic act and the act of March 3, 1879 (20 Stats. 410), says: 

‘‘ The first act mentioned declares that ‘ all taxes collected ’ in the District 
‘ shall be disbursed for the expenses of said District.’ This word ‘ taxes ’ is a 
nomen generalissimum, including taxes on chattels, and on realty, assessments, 
licenses, fees, and revenues in every form, which, as the statute says, are to be 
‘ collected.’ But the latter act shows that Congress foresaw that the District 
would sometimes receive money ‘otherwise’ than taxes, as (1) from sales of 
property, (2) from profits on investments, and, possibly, (3) by gifts, bequests, 
etc. It was accordingly provided, that ‘ all revenues of the District * * * 

from taxes or otherwise shall be deposited, to the credit of the Treasurer of the 
United States, in the Treasury.’ But it is not provided that all revenues ‘ shall 
be disbursed for the expenses of said District,’ but only that ‘ taxes collected ’ 
shall be so disbursed. And no money can be drawn from the Treasury except 
by virtue of an appropriation. 

“The act of June 11, 1878 (20 Stat. 104), requires annual estimates to be 
transmitted to Congress of proposed expenditures for the District, and then 
provides that: 

“ ‘ To the extent to which Congress shall approve of said estimates. Congress 
shall appropriate the amount of 50 per centum thereof, ami the remaining 50 
per centum of such approved estimates shall be levied and assessed u])on the 
taxable property and privileges in said District other than the property of tb'i 
United States and of the District of Columbia.’ 

“ Here, again, is a provision that ‘ the expenses of said District ’ shall be 
paid from money ‘ levied and assessed upon the taxable property and privileges 
in said D'strict,’ but not from revenues ‘ otherwise ’ derived. Thus, only taxes 
on property and privileges, taxes which can be ‘ ('ollected,’ are appropriated to 
‘ be disbursed for the expenses of said District.’ Congress has been careful to 
appropriate not all the revenues of the District, but only that part of the 
revenues derived from taxes on property and privileges. It is evident that 
Congress did not ‘ appropriate ’ or authorize to be used the whole income or 
profits which might accrue to the District. The act of March 3. 1879 (20 Stat. 
410), refers to ‘revenues’ arising ‘otherwise’ than fi-om taxes, and requires 
‘ all ’ to be deposited in the Treasury.” 

And, finally, in endeavoring to determine whetlier the Congress that i»;issetl 
the organic act intended to split hairs and divide local dollars between the 
United States and the District, it is only necessary to realize, among other 
things, the financial condition of the District at that period, with an enormous 
indebtedness, the heritage of an earlier government, and a l)ankru])t treasury. 

In the last paragraph of this chapter the accountants very briefiy refer to 
the fact that moneys collected in the Supreme Court of the District are de¬ 
posited in the Treasury wholly to the credit of the United States. Although 
the District has a very clear equity in such moneys, as it pays 60 per cent of 
the appropriations for salaries and expenses of the court, and was charged 
with one-half of the cost of reconstructing the building occupied by the court 
(about $900,000), no effort apparently was made to develop the total of such 
moneys credited to the United States, so that the measure of the District’s 
equity might be ascertained. 

CERT,\IN DISBURSEMENTS NOT INCLUDED IN EXPENSES OF DISTRICT. 

tPp. 36 to 37.) 

The accountants here show that since July 1, 1911, salaries and allowances 
have been paid wholly from Federal revenues to certain Armv officers, includ¬ 
ing the several engineer commissioners and their assistants,' “ assigned from 
time to time to duty in connection with the supervision of certain interests of 
the District Government,” the amounts so paid from that date until June 30 
1922, aggregating $282,422.18. The accountants charge that “ in the accounts 
and reports of the Secretary of the Treasury and the auditor of the District 
no consideration has been given to the above expenditures, nor to the com¬ 
pensation of certain other Army officers * * The reason for this is 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 97 


verj’ simple. Congress has never required the District to pay any part of such 
salaries and allowances. The engineer commissioner is a member of the 
Board of Commissioners by detail by the President, pursuant to the provisions 
of the organic act, and his assistants are also detailed by the President (29 
Stat, 246), Other Army officers referred to are assigned to public works 
retained under the control and supervision of United States authorities by 
the organic act. 

The suggestion by the accountants that the District should pay part of the 
compensation of clerks and supervisors of the General Accounting office 
can hardly be intended to be taken seriously. It is .iust as reasonable and 
logical to extend this idea to the Budget Bureau ami other departments of 
the Federal Government having to do with District matters, if not to Congress 
itself. 

The accountants (on pages 37 and 38) call {ittention to certain disburse¬ 
ments charged wholly against the United States for increase of compensation 
(the bonus) to emi)loyees of the Court of Appeals, the Sui)reme Court of the 
District, Public Buildings and Grounds, and the National Zoological Park, 
amounting in all to $34.5,602.52. The basic salaries of the several employees 
were derived from appropriations payal)le in part by the United States and 
the District. Whether a charge of $191,890.35, as found by the accountants, 
should now be made against the District in this connection is a matter for 
your committee to decide. Iffiis also is the case concerning any liability on 
the part of the District under the apin-opriations of $80,000 and $2,500 for 
the acquisition of additional land for the National Zoological Park. (P. 19 
of the report.) 

OLD DALANCES CARHIED ON TREASURY DEPART^fENT EEDGERS. 

(Pp. 39 to 41.) 

No comment is made or deemed necessary. 

ET'NDED DEirr OF THE DISTRICT OUTSTANDING .1UNE 30, 1 878. 

(Pp. 41 to 45.) 

No comment is made or deemed necessary on matter appearing on pages 41 
to 45, except as to the question presented in concluding paragraph on page 33. 
The accountants call attention to the act of Congress approved June 10, 1879, 
authorizing the Commissioners of the District to issue certain bonds to an 
amount not exceeding $1,200,000, and to the provision in that act that it should 
not be construed to make the United States liable for any part of the principal 
or interest on the bonds. The principal and interest were paid from appro¬ 
priations made jointly from the revenues of the United States and the District. 
This matter was very fully covered in the IMayes report, but no reimburse¬ 
ment was required to be made to the United States by the District, on the 
ground, so it is understood, that Congress in making annual appropriations 
tor the interest and sinking fund of the District on the half-and-half basis 
thereby repealed by the terms of each such appropriation that part of the act 
of June 10, 1879, exempting the United States from the liability indicated. 
That appropriations apparently were deliberately made in this way with a 
full knowledge of the circumstances is shown by the report of the Treasurer 
of the United States (as ex officio of the sinking fund of the District) re¬ 
ferred to by the accounts on page 34 of this report. 

FUNDING DEBT OF THE DISTRICT OUTSTANDING .TUNE 30, 1022. 

(Up. 45.) 

This is merely a verification of the outstanding 3.65 bonds of the District 
($4,719,700), and obligations of the United States held as sinking fund invest¬ 
ments (.$4,517,500). No comment is deemed necessary. 

SINKING FUND OFFICE. 

(Pp. 45 to 48.) 

No comment is ileemed necessary, except as to the matter on page 40, relating 
to the purchase for redemption of 3.65 bonds at prices in excess of the par 
value of the bonds. The accountants show that from June 30, 1878, to June 30, 


98 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OE COLUMBIA. 


1914, such bonds ol the par value of !j'7,985,600 were redeemed at a premium 
eost (including apparently an undetermined amount of purchased interest) of 
Sl,02{y378.96. It is shown that purchases were made at rates as high as $120 
per $100 par Milue. It has bo'cii contended that the law was violated in paying 
more than par (plus accrued interest) for the 3.65 bonds. Whether such was 
the case or not the District is not responsible. The entire adininistra.tion of 
the sink ng fund office, including the expenditure of appropriations for interest 
and principal on the funded debt of the District, was transferred to the Treas¬ 
urer of the United States by the terms of the organic act. The lay' even 
exemptc'd the accounts for all such expenditures from audit by the auditor of 
the District. 

OFI'TCE OF THE COLLECTOR OF TAXES. 


( Dp. 48 and 49.) 

The statement.s of the accountants under this caption are not material to the 
real purpose of the investigation. Lurther comment is deemed unnecessary at 
this time. 


OFFICE OF THE KEGISTI:R OF WILLS OF THE DISTRIC'l' OF COH^MHIA. 

(Dp. 49 to 52.) 

OFFICE OF THE RECORDER OF DEEDS. 


(Pp. 52 to 54.) 


The matters presented in the report of the accountants under the above-styled 
chaptei's, are purely incidental to the investigation iiroper. Further comment 
is deemed unnecessary at this time 

In compliance with your request I am returning herewith the copy of the 
report of the accountants loaned me for my use in preparing my views thereon. 

Very respectfully, 


D. J. Donovan, 

Auditor of the District of Coluuibiu. 


November 6 . 1922. 

To the Commissioners : 

Ilecomniending the reference of this report to the Comptroller General of 
the United States for his decision to the question hereinafter presented. 

The District of Columbia appropriation act for the fiscal year 1923 provides: 

“And that from and after June 30, 1922, any revenue derived from any 
activity or sources whatever, including motor-vehicle licenses, not otherwise 
herein disposed of, which activity or source of revenue is appropriated for by 
both the United States and the District of Columbia, shall be divided between 
the, two in the same proportion that each has contributed thereto.“ 

There is some doubt and differences of opinion as between this office and 
the General Accounting Office as to the particular items of revenue affected by 
the legislation quoted. Apart from taxes on real and personal property we have 
some 61 distinct items of miscellaneous receipts entering into the total 
of revenue, collected by the District each year. Of this number the moneys 
received on 44 items are credited either 50-50 or 60-40 between the District 
amLthe United States, and the sums received on 17 items, until June 30, 1922, 
have been treated as belonging wholly to the District. The question presented 
in this report has reference to this latter group. 

The act of June 11, 1878, known as the “ organic act ” of the District, re- 
(piired the commissioners to submit to the Secretary of the Treasury, on or 
before October 15 of each year, estimates of the amount necessary to defray 
the expenses of the government of the District of Columbia for the next fiscal 
year. The Secretary of the Treasury was required to transmit these estimates 
to Congress. The act of 1878 declares that: 

“ To the extent to which Congress shall approve of said estimates. Congress 
shall appropriate the amount of fifty per centum thereof, and the remaining 
fifty per centum of such approved estimates shall be levied and assessed upon 
the taxable property and privileges in said District other than the property of 
the United States and of the District of Columbia.” 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 99 


ITidei* the terms of the act of 1878 the Dintriet, commeiieiiig with July 1, 1878. 
<‘laime(l and henetieially received credit for the entire amount of all nhscella- 
neous revenues, and tins was the rule of action, concurred in by the accounting' 
otticers of the Fruited States Treasury until the passage of the District appro¬ 
priation act for the tisca! year 1889 (approved July 18, 1888), when Congress for 
the tirst time started the i^ractice by specific legislation of depriving the Dis- 
lri(,*t of entire credit to certain of such revenues. By legislative provisions 
adopted from tliat time to the present. (L\)ngress has gradually provided for the 
distribution between the United States and the District of all but 17 of the 61 
items of miscellaneous l■('^enue. Each of these 17 items ^^•i!l be taken up and 
■considered separately. 

1. Motor vehicle tags, including duplicate tags: The total amount collected 
on this item for the fiscal year 1922 was $319,074. There is no question but 
that beginning with July 1, 1922, moneys collected under this heading must be 
covered into the Treasury, 40 per cent to the credit of the FTnited States and 
60 per cent to the credit of the District, as such provision is clearly made 
by the provisions of the District appropriation act for 1923. 

2. Special reimbursable taxes: The amount collected on this item for the 
tiscal year 1922 was $1,000.04. The moneys under this heading are derived 
from assessments made -against private property under authority of certain act 
of Congress. The expenditures in the first instance have been made from appro¬ 
priations payable in ecpial parts by the United States and the District until 
.lune 30, 1920, and thereafter payable 60 per cent by the District and 40 per 
cent by the United States. This appropriation as it ai)pears in the District 
appropriation act for 1923, and which is substantially similar to the language 
employed in the similar ap])ropilation for previous years, reads as follows: 

‘* Ftn* the enforcement of the provisions of an act to provide for the drainage 
•of lots in the District of Columbia, approved May 19, 1896, and an act to provide 
for the abatement of nuisances in the District of Columbia by the commissioneTs. 
^ind foi* other purposes, approved April 14, 1906, $2,000.” 

The act for the abatement of nuisances ftrovided that the cost of correcting 
■conditions therein described shall be assessed “ as a tax against the property 
■on which such condition existed or from which such condition arose,” and shall 
“ carry such tax on the regular tax rolls of said District, and collect such tax 
in the same manner as general taxes in said District are collected.” 

The act for the drainage of lots, referred to in the appropriation quoted, pro¬ 
vides ” that each original lot on subdivisional lot situated on any street in the 
District of Columbia where there is a public sewer shall be connected with said 
sewer * * * ; and if such original lot or subdivisional lot is situated on any 

street in said District where there is a public sewer and water main, such 
original lot or subdivisional lot shall be connected with said sewer and also 
with said water main * * The act in question further provides that 

where such work is done by the District the cost “ shall be assessed as a tax 
against said lot, which tax shall be carried on the regular tax roll of the Dis¬ 
trict of Columbia, and shall be collected in the manner provided for the collec¬ 
tion of other taxes.” 

Enforced in conjunction with the act for the abatement of nuisances are two 
'Other acts of Congress, where the expenditure is made from the appropriation 
■quoted and the collection is accounted for under the caption “ Special reim- 
■bursable taxes.” The first is an act approved January 25, 1898, entitled “An 
act to regulate, in the District of Columbia, the disposal of certain refuse, and 
for other purposes.” This is what is generally termed “ the privy law.” The 
act provides “ that it shall be unlawful for any person or persons to maintain, 
upon any lot or subdivisional lot, situated on any street in the District of 
Columbia where there is a public sewer and water main available for the use 
of such lot, any system of disposal of human excreta except by means of water- 
closets connected with such sewer and water main.” Where privies are per¬ 
mitted because of the absence of sewer and water main facilities and where 
the owner or owners of the property fail to remove the contents of privies from 
the premises, and owner or owners can not be found, it is provided in section 
16 of the act that the commissioners shall cause such work to be done and 
“ assess the cost thereof as a tax against the property benefited, which tax shall 
he carried on the regular tax rolls of the District of Columbia, and shall be 
collected in the manner provided for the collection of other taxes.” 

The second act of Congress referred to is one approved March 1, 1899, en¬ 
titled, “An act to cause the removal of weeds from lands in the city of Wash¬ 
ington, District of Columbia, and for other purposes.” This act provides “ that 


100 FISCAL EELATIONS BETWEEN U. S. AND DTSTBTCT OF COLUMBIA. 


an act of ('on- 
ainendcMl, later 
relating: to tlie 


it shall be the duty of the owner, occupant, or agent in charge of any land in 
the city of Washington, District of Columbia, or in the more densely populated 
suburbs of said District to remove from such land any weeds thereon of 4 or 
more inches in height * * and where the District has to do the work,, 

section 2 of the act provides that “ the cost of such removal * * * shall 

be assessed by said commissioners as a tax against the property on which said 
weeds were located * * * and shall be carried on the regular tax rolls of 

said District and be collected in the manner provided for the collectiofi of 
general taxes.” 

It will be noted that there is a sticking similarity of language eini)Ioyed in 
the several acts, in that the assessment in every instance must be carried on 
the regular tax rolls of the District and collected in like maniKU- as other taxes 
are collecte<l. Until June 30, 1922, the entire collections under these several 
acts of Congress have been covered into the Treasury wholly and btuielicially tO' 
the credit of the District of Columbia on the assumption that such moneys, be¬ 
cause of the language of the laws, partook of the nature of general taxes: and 
as the District under the act of .hme 11, 1878, is entitled to the entire credit 
for all general taxes, so it has been held it also was entitled to credit for all 
so-called “ special reimbursable taxes,” and this view of the matter has l)een 
concurred in by the accounting officers of the Treasury since 1993. 

The Comptroller General’s decision is re(]uested whethei’ collections from 
special reimbursable taxes since July L 1922, should be covered into the Treas¬ 
ury as revenue derived from an activity or source appropriated for by both 
the United States and the District of Columbia within the meaning of the 
legislation contained in the District appropriation act for 1923. 

2. Police court tines: The amount collected under this heading for the tiscal 
year 1922 was $360,190.93, which was credited wholly to the revenues of the 
District of Columbia. 

The police court of the r)istrict of Columbia was created l)y 
gress approved June 17, 1870 (16 Stat. 17)3), and this act, as 
became sections 1041 to 1080. inclusive, of the Revised Statutes 
District of Columbia. Sections 1079 and 1080 provide: 

“ Sec. 1079. All tines, penalties, costs, and forfeitures imposed or taxes 
police court shall be collected by the marshal or by the major of police, 
case may be, on process ordered by the court and by them paid over 
District. 

“ Sec. 1080. The moneys collected upon the judgments of the police court, or 
so much thereof as may be necessary, shall be applied to the payment of the 
salaries of the judge and other officers of the court, as provided in .section 1046, 
and to the payment of the necessary expeii.ses thereof, and any surplus i*emain- 
ing after paying such salaries, compensation, and expen.ses .shall be i)aid into 
the treasury of the District at the end of every (piarter.” 

The expenses indicated in section 1080 were i>aid in such manner until the 
pas.sage of the act of June 11, 1878, when appropriations for salaries and ex¬ 
penses of the police court were made each year by Congress payal)le efiually 
by the United States and the District of Columbia until the fiscal year 1921, 
when the ratio was changed to 60 per cent by the District and 40 ]>er cent 
(be United States. 

The act of .Tune 11, 1878, provided a permanent form of goyernment f(»r the 
District of Columbia, and that all laws then in force relating to the District 
not inconsistent with said act should remain in full force and effect. The 
District, following the passage of said act, continued to receive credit for all 
tines collected in the police court, and that this practic(‘ was correct in law is 
evidenced by the decision of Judge Lawrence, First Coinidroller of the Treas¬ 
ury, rendered August 24, 1882 (3 Lawrence, 264). This (h^cision, as far as I 
know, is the only one on the subject {ind pursuant thei-eto all police coiud 
tines, as stated, Inn^e been credited wholly and beneticially to the District of 
Columbia. Congress, however, acting ui)on a report of the House Committee 
on the District of Columbia, and following an investigation by that committee 
into fiscal relations between the Thiited States and the District, recpiired the 
District to transfer to the cri'dit of the revenues of the United States the 
sum of $211,450.12, representing hues colh'cted in the XTiited States branch of 
the police court between 1879 and 1902, exclusive of such ])art of the tines 
during that period as were used for the })ayment of policemen’s and firemen’s 
pension. The legislation provision for this transfer appears in the deficiency 
appropriation act approved April 17, 1917, and read as follows: 

“ The sum of $211,450.12, rei)resenting tines in United States cases collecttnl 
on judgments of the police court'of the District of Columbia, during the perio<l 


by 

as 

to 


the 

the 

the 


FISCAI^ RELATIONS BETWEEN U. 


S. AND DISTRICT OE COLUMBIA. 


101 


from July 1, 1878, to January 1, 1902, inclusive, and deposited in the Treasury 
of the United States to tlie credit of tlie District of Coluinhia, shall be trans¬ 
ferred from the credits of the District of Columbia to the United States.” 

This transfer of funds was made in the settlement of the account between 
the United States and the District of Columbia in the fiscal year 1917. 

Ky the act approved June 11, 1890 (29 Stats. 404), it is provided: 

” That hereafter the Commissioners of the District of Columbia are hereby 
authorized and directed to deposit with the Treasurer of the United States, 
out of receipts from tines in the police court, a sufficient amount to meet any 
deficiency in the police fund or the firemen’s relief fund.” 

Police court fines continued to be used for the payment of pensions of police¬ 
men and firemen from the date of the authorizing iaw until the passage of the 
District appropriation act for 1917, approved September 1, 1916, when, by sec¬ 
tion 12 of that act, the amount annually necessai^ to meet deficiencies in the 
payment of such pensions became a charge against the general revenues of 
the District, thus releasing the specific application of police court fines to that 
purpose and permitting such fines to become part of the general revenue fund 
of the District. 

It will be noted that the transfer of certain police court fines to the United 
States, required by the act of April 17, 1917, covered the period between July 
1, 1878, and January 1, 1902. The action of the House Committee on the Dis¬ 
trict of Columbia in recommending the legislation was based upon the assump¬ 
tion that sections 1079 and 1080 of the Revised StatvUes relating to the Dis¬ 
trict were repealed by the organic act of June 11, 1878, notwithstanding the 
decision of Judge Lawrence, hereinbefore referred to, rendered in 1882. four 
years later than the organic act, and under which the District received credit 
for all police court fines. 

Beginning with January 2, 1902, there can be no doubt of the District’s right 
to all fines collected in the police court, as the act of March 3, 1901 (31 Stats. 
1199), establishing a code of law for the District of Columbia, provides: 

” All fines, penalties, costs, and forfeitures imposed or taxed by the police 
court shall be paid to the clerk of said court * * *. The clerk of the police 

court shall, on the first secular day of each week, deposit with the collector of 
taxes the total amount of all fines, penalties, costs, and forfeitures collected by 
him during the week next preceding the date of such deposit, to be covered into 
the Treasury to the credit of the District of Columbia, subject to the require¬ 
ments * * * to meet any deficiencv in the police fund or the firemen’s relief 

fund * * 

The total appropriations for the police court for the present fiscal year 
{iinount to $59,840, payable on the basis of 60 per cent by the District and 40 
per cent by the United States, while the total fines collected in that court in 
the fiscal year 1922 (and the amount is increasing each year), were $360190.93. 
Do these fines represent revenue derived from an activity or source appropri¬ 
ated for by both the United States and the District of Columbia, within the 
meaning of the legislation in the District appropriation act for 1923? If they 
do it would seem that all revenue, from whatever source derived, falls within 
the meaning of that law as all money paid the District, whether in the form of 
general taxes or otherwise, arises through the functioning of some depart¬ 
ment or branch of the government of the District of Columbia that is appro¬ 
priated for by both the United States and the District of Columbia. 

The decision of the Comptroller General is requested whether fines col¬ 
lected in the police court is revenue derived from an activity or source appro¬ 
priated for by both the United States and the District of Columbia witldn the 
meaning of the legislation contained in the District appropriation act for the 
fiscal year 1923. 

4. Juvenile court fines: The amount collected under this heading for the 
fiscal year 1922, and credited wholly to the revenues of the District of Colum¬ 
bia, was $864.66. The appropriations for salaries and expenses of that court 
for the fiscal year 1923 total $37,180, payable 60 per cent by the District of 
Columbia and 40 per cent by the United States. 

The .iuvenile court was created by an act of Congress approved March 19, 
1906 (34 Stats. 73). The District prior to July 1, 1922, has received credit 
for all fines collected in that court pursuant to the provisions of section 20 of 
said act, which reads as follows: 

‘‘That all fines, penalties, costs, and forfeitures imposed or taxed by the said 
juvenile court shall be paid to the clerk of said court, either with or without 
process, or on process ordered by said court. The clerk of said court shall, on 


102 FISCAL RELATIONS BETWEEN U. S. AND DISTRK’T OF (X)LUMBIA. 


the first secular dav of each week, deposit witli the collector of taxes the 
total amount of all'tines, penalties, costs, and forfeitures collected hy hini 
<luring the week next ])recediiig the date of such deposit, to be co\eied into 
the Treasury to the credit of the District of Columbia * * *, 

The decision of the Comptroller (xeneral is requested whether tines collected 
111 the juvenile court is revenue derived from an activity or source appro- 
pr ated for bv both the United States and the District of Coliimbhi within tin* 
meaning of tiie legislation contained in the District appropriation act for 1923. 

5. Dog taxes: The amount collected under this heading for the fiscal year 
1922, and credited wholly to the revenues of the District of Columbia, was 
.$24,439.48. The tags issued each year upon payment of this tax are purchased 
at a cost aiiproximating $400. from the a])propriation annually made lor general 
contingent and miscellaneous expenses of Distinct offices. The approtiriat.on foi 
this purpose for the tiscal year 1923 is $4r),0(M), and appears in the District 
appropriation act under the caption “Contingent and miscellaneous expenses. 

An act of Congress approved .Tune 19, 1878 (20 Stats. 173), entitled “An 
act to create a revenue in the District of Columbia by levying a tax upon all 
dogs therein, to make such dogs personal property, and for other purposes,’' 
imposed “ a tax of two dollars each per annum upon all dogs owned or kept in 
the District of Columhia, said tax to be collected as other taxes in said District 
are or may be collected.” Section 3 of said act imixises a charge of $2 for the 
redeniiition of dogs found running at large without a tax tag and by reason 
thereof impound^ by the poundmaster. This act was amended by an act 
a])proved .Tune 30, 1902, (32 Stats. 547.) 

The decision of the Comptroller Ceneral is requested whether moneys de¬ 
rived from the tax imposed upon dogs, and pound fees, is revenue from an 
activity or source appropriated for by both the United States and the District 
of Columbia within the meaning of the legislation contained in the District 
approinlation act for 1923. 

6. Elevator operators licenses; The amount collected under this heading for 
the tiscal year 1922 was $267.50, which amount was credited wholly to the 
revenues of the District of Columbia. 

Under an act of Congress approved March 3, 1887 (24 Stats. .580), the Com¬ 
missioners of the District of Columbia are authorized to make and i)ublish such 
(u ders as may be necessary to regulate the construction, repair, and operation 
of all elevators within the District and to prescribe sucii means of security as 
may be found necessary to protect life and limb. 

Pursuant to said act of Congress the commissioners have from time to tim(‘ 
established regulations on this subject. Elevator operators are required to 
]) 0 ssess certain qualifications and undergo prescribed tests. The regulations 
1 ) 1-0 vide: 

“ No person shall have charge of or operate any elevator as janitor, elevator 
(operator, or conductor until he shall have applied for and obtained a certificate 
authorizing him to operate such elevator, and a badge, which badge shall be 
worn by him while operating such elevator. Such certificate and badge will be 
issued by the inspector of buildings upon the successful examination of the ap¬ 
plicant as to his fitness, which examination shall be held under such rules as 
may be prescribed by the Commissioners of the District of Columbia. The 
authority given by this certificate will be limited to the building therein 
designated. 


“ A fee of fifty cents will be charged the applicant to cover the cost of certifi¬ 
cate and badge, which shall be deposited with the collector of taxes of the 
District of Columbia and covered into the revenues of said District.” 

The Comptroller General is requested to decide whether elevator fees repre¬ 
sent revenue derived fi-om an activity or source appropriated for by both the 
Un’ted States and the District within the meaning of the legislation containeu 
in the District appropriation act for 1923. 

7. Steam engineers’ licenses: The amount collected under this beading foi- tin* 
fiscal year 1922 was $453. .all of which was credited to the revenues of the 
District of Columbia. 

The subject of steam engineering and boiler inspection is covered in chapter 
63 of the Compiled Statutes iu force in the D'strict of Columbia. Section 1 of 
that chapter provides that “ it shall be unlawful for any person to act as steam 
engineer in the District of Columbia who shall not have been regularly licensed 
to do so by the commissioners thereof.” Section 2 provides for an exam‘nation 
of applicants by a board composed of the inspector of boilers of the District and 
two practical engineers to be appointed by the commissioners. Section 4 
provides that the fee for the license as a steam engineer shall be $3. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 103 



an aiiiiiial ('oiiipeiisatioii of $2(X) for their services as ineiiihers of the Board 
ot examiners, steam engineers.” This appropriation for the present tiscal 
year appears in the District appropriation act for 1923 as follows: 

“Board of examiners, steam engineers. Salaries: 3 meml)ers, at $200 eacli. 
$600,” 

Ihis appropriation is payable 00 per cent hy the District of Colnmhia and 
40 per cent by the United States. 

The decision of the Comptroller General is requested whether fees received foi' 
steam engineers’ licenses is I’evemie derived from an activity or source ai)pro- 
priated for by both the United States and the District of (’olnmbia withm the 
meaning of the legislation contained in the District approi)riaton act for 1923. 

8. Insurance licenses, inclnding transfers: The amount collected under this 
heading for the ilscal year 1922, was $27,969.99. This amount was credited 
wholly to the revenues of the District of Colnml)ia. Insurance licenses are 
issued by the superintendent of insurance and the license fees paid to the 
collector of taxes. The insurance department, salaries and expenses, is sup¬ 
ported by appropriations payable 60 per cent by the Disti-ict of Co’.mnbia 
nnd 40 per cent by the United States. 

Section 654 of the Code of Law for the District of Columbia provides for the 
establishment of a department of insurance, under the direction of the Corn- 
miss oners of the District, and authorize the commissioners to appoint a super¬ 
intendent and other employees. Section 654 ot the Code prov.des: 

“ Sec. 654. Insurance Agents.—No person, firm, or corporation shall act as 
agent for any insurance coinpany or association, or act as insurance broker or 
agent for procuring or placing insurance for commission, compensation, gain, 
or profit, without first having obtained a license as an insurance agent or 
broker from the superintendent of insurance of the District. Every such li¬ 
cense certificate shall have printed conspicuously upon its face the words 
‘ General insurance license,’ and for such license the sum of fifty dollars shall 
be paid annually in the month of March to the collector of taxes of said Dis¬ 
trict * * 

The decision of the Comptroller General is requested whether moneys paid 
for insurance licenses is revenue derived from an activity or source appro 
printed for both the United States and the District of Columbia within the 
meaning of the provisions of the District appropriation act for 1923. 

9. Miscellaneous Licenses: The amount collected under this heading for the 
fiscal year 1922 was $158,300.78. This amount was credited wholly to the reve¬ 
nues of the District of Columbia. The fees received under this caption repre¬ 
sent business and occupational license taxes, the licenses being issued through 
the office of the superintendent of licenses, an office supported by appropriations 
payable 60 per cent by the District of Columbia and 40 per cent by the United 
►States. 

Section 7 of the District of Columbia appropriation act for the fiscal year 
1903, approved July 1, 1902, provides: 

“ Sec. 7. That no person shall engage in or carry on any business, trade, pro¬ 
fession, or calling in the District of Columbia for which license tax is imposed 
by the terms of this section without having first obtained a license so to do. 
Applications for licenses shall be made to the assessor of the District of Co¬ 
lumbia, and no license shall be granted until payment for the same shall have 
been made. Every license shall specify by name the person, firm, or corporation 
to which it shall be issued, the business, trade, profession, or calling for which 
it is granted, and the location at which such business, trade, profession, or 
calling is to be carried on. Licenses granted under the terms of this section 
may be assigned or transferred on application upon the conditions applicable 
to granting the original licenses, and the assessor shall issue a certificate of 
.such assignment or transfer upon the payment to the District of Columbia of 
a fee of fifty cents therefor. All licenses and transfers issued or granted shall 
be signed by the assessor of the District of Columbia and impressed with the 
seal of his office.” 

“ Par. 7. That apothecaries or druggists shall pay a license tax of six dollars 


* 


* 


* 


per annum 

“ Par. 8. That auctameers shall pay a license tcix of one hundred dollai-s per 
annum * * *. 


104 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUIfi;BIA. 


“Par. 9. That coiiimissioii iiiercliaiits shall pay a license tax of forty dollars 
per annum * * * 

“ Par. 10. That cattle dealers shall i)ay a license tax of fifteen dollars i)er 
annum * * *, 

“ Par. 11. That proprietors or owners of hacks, coaches, omnihuses, carriages, 
wagons, and other passenger vehicles for hire shall pay license taxes as fol¬ 
lows : Vehicles drawn by one animal, six dollars per annum; autovehicles, auto¬ 
mobiles, electromobiles, or other horseless vehicles by whatever name called, 
and vehicles drawn by more than one animal, nine dollars per annum * * 

“ Par. 12. That proprietors or owners of livery stables shall pay license taxes 
as follows: For stables containing ten stalls or less, twenty-five dollars per an¬ 
num, and two dollars per annum additional for each stall in addition to 
ten * * *. 

“ Par. 13. That proprietors or owners of establishments where autovehicles 
of any pattern, description, or motor power whatsoever are kept for hire or are 
kept or stored for others, for pofit or gain, shall pay a license tax of twenty-five 
dollars per annum for ten vehicles or less and two dollars additional for each 
vehicle in addition to ten 


* * 


“Par. 14. That persons, firms, or corpora.tions operating vehicles for hire or 
for the transportation of passengers in the District of Columbia with sufficient 
regularity to enable the public to take passage therein at any point intermediate 
to the stable or stand of such vehicle, or operate such vehicle over a route 
sufficiently definite to enable the ])ul)lic to ascertain the streets and avenues 
on which such vehicle can be found en route, shall pay license taxes as follows: 
For each vehicle with a seating capacity not to exceed ten passengers, six 
dollars per annum; for each vehicle with a seating (•ai)acity exeeeding ten 
passengers, twelve dollars per annum * * *. 

“ Par. 15. That real estate brokers or agents shall pay a license tax of fifty 
dollars per annum * * *_ 

“ Par. 16. That persons, firms, coiporations. or associations transacting the 
business of the purchase or sale of securities, stocks, shares, or certificates, 
based upon an estimated value after a lapse of a certain period of time, or who 
undertake to guarantee the holder of said securities, stocks, shares, or certifi¬ 
cates certain sums of money based upon investments after the lapse of a 
certain time, or who pronrse to divide with the holders or investors of said 
securities, stocks, shares, or certificates, or with the heirs or asigns of such 
holders or investors, any profit which may accrue from their investments at 
maturity, shall i)ay a license tax of one hundred dollars per annum * * *. 

“ Par, 17. That railroad ticket brokers shall pay a license tax of twenty-five 
dollars per annum. 

“ Par. 18. Proprietors of hotels shall pay annually one dollar for each room 
provided for the accommodation of guests * * * 

“ Par. 19, That victualers, owners of restaurants, oyster houses, cookshops, 
ice-cream parlors, dairy lunches, or eating houses, by whatsoever name desig¬ 
nated, where food, meals, or refreshments are .served to transient customers, 
to be eaten on the premises where sold, shall pay a license tax of eighteen 
dollars per annum * * * 

“ Par. 20. That owners, lessees,, or managers of theatres having a stage and 
movable scenery used for the purpose of acting, performing, or playing any 
play, farce, interlude, opera, or other theatrical or dramatic performance, or 
any scene, section, or portion of any play, farce, burlesque, or drama of any 
description, for gain shall pay a license tax of one hundred dollars per annum : 
Provided, That licenses may be granted for theatrical performances for one 
week on the payment of twenty dollars and for less than one week on the i)ay- 
ment of ten dollars: And provided further. That the i)roprietors of buildings, 
other than theatres, where exhibitions, lectures, or entertainments of any 
description are conducted for gain shall pay a license tax of one hundred 
dollars per annum, or for lessees’ periods as follows: Thi’ee dollai’s per day, or 
ten dollars for the first week and five dollars for each subsequent consecutive 
week * * *, 

“ Par. 21. That every person who exhibits paintings, pictures, or works of 
art. or makes industrial, mechanical, agricultural, food, or floral exhibitions, 
including cattle and poultry shows, freaks and museum attractions, side shows, 
and all other lawful exhibitions not otherwise provided for. shall ])ay a license 
tax of three dollars per day. or ten dollars for the first week and five dollars 
additional for each subsequent con.secutive week, and for an annual license the 
tax shall be one hundred dollars. 


FISCAL RELATIONS BETWEEN V. S. AND DISTRUST OF COLUMBIA. 105 


I APw 21. That persons condiictinj;’ concerts, entertainments, or balls to 
which an admission fee is charji:ed, directly or indirectly, shall pay a license 
tax of three dollars for each day or night. 

Par. 23. That proprietors or owners of any cii’ciis shall pay a license tax 
of two hundred dollars per day. 

I’ar. 24. That owners or lessees of grounds used for horse racing, tourna¬ 
ments, athletic sports, baseball, football, polo, golf, and kindred games, or 
where feats of horsemanship are performed, to which admission fees are 
<‘harged, or which are used for profit or gain, directly or indirectly, shall pay a 
license tax of twenty dollars per week or five dollars per day. 

“ Par. 25. That owners or lessees of grounds or premises used for picnics or 
l.awn fetes or resorts where theatrical or musical attractions or other amuse¬ 
ments ai’e presented, to which admission fees are charged or which are usi^l 
for pr(»fit or gain, directly or indirectly, and which are not taxed under any 
other paragraph of this section, shall pay a license tax of three doliars per day 
or ten dollars per week and five dollars additional for each subsequent consecu¬ 
tive week, or for an annual license a tax of one hundred doilars. 

“ Pai-. 2(1. That owners or lessees of buildings used for skating rinks, fairs, 
carnivals, or amusements not otherwise provi(led for in This section shall pay 
a license tax of three dollars per day, or ten dollai-s for the first week and five 
dollars additional for each subsequent consecutive week, or for an annual 
license a tax of one hundred dollars. 

“ I’ar. 27. That owners or lessees of shooting galleries, fencing schools, public 
gymnasiums, places where firearms of any description are used, or schools 
where the art of self-defense is taught shall pay a license tax of twelve dollars 
ITer annum * * *. 

“ I’ar. 28. That proprietors or owners of appanitus or machines known as 
merry-go-rounds, flying horses, or similar devices for amusement shall pay a 
license tax of twelve dollars for the first week and ten dollars for each subse¬ 
quent consecutive week, or three dollars per diem * * *. 

“ Par. 29. That proprietors or owners of slot or automatic machines, so 
called (telephones excepted), by which objects, pictures, or figures are pre¬ 
sented to public view, or musical or vocal exhibitions are automatically given 
on the deposit of money or metal, or where a pecuniary consideration is re¬ 
ceived for the use of said apparatus or machines, shall pay a license tax of 
two dollars per annum for each machine or apparatus: Provided, That on the 
payment of a license tax of fifty dollars per annum the number of machines at 
any one location shall not be limited: u\nd py'ovided further. That no license 
shall be issued for less than two dollars. 

“ Par. 80. That owners or managers of Turkish, Russian, or medicated baths 
shall pa.v a license tax of twenty-five dollars per annum. 

“Par. 81. That owners or managers of massage establishments shall pay a 
license tax of twent.v-five dollars per annum * * *. 

“ Par 32. That mediums, clairvoyants, soothsayers, fortune tellers, or palmists, 
by whatsoever name called, conducting business for profit or gain, directly or 
indirectly, when permitted to practice their calling in the District of Columbia, 
shall pay a Pcense tax of twenty-five dollars per annum * * ♦ 

“ Par. 33. That hucksters or produce dealers at large shall pay a license tax 
of twelve dollars per annum for each vehicle used in the conduct of their busi¬ 


ness 
“ Par. 
num for 
“ Pni-. 
annum 
“ Par. 


34. That fuel huckstei-s shall pay a license tax of five dollars per an- 
each vehicle used in the conduct of their business * * *. 

85. That peddlers shall pay a license tax of twenty-five dollars per 


38. That billposters and persons engaged in the business of painting 
or placing signs or advertisements on land, buildings, billboards, fences, O)* 
other structures in the District of Columbia visible from a street or other 
public space shall pay an annual tax of twenty dollars before engaging in said 
business * * *. 

“ Par. 40. That owners or lessees of any bulidings, structures, or tanks used 
for the storage of any description of inflammable oil in quantities exceeding 
five barrels shall pay a license tax of ten dollars * * *. 

“ Par. 41. That owners or lessees of laundries operating otherwise than b.v 
hand power shall pay a license tax of twenty dollars per annum. Owners or 
lessees of laundries operated by hand labor shall pay a license tax of ten 
dollars per annum. 

32894—S. Doc. 301. 67-4-8 



106 FISCAL RELATIONS BETWEEN U. S. AND DISTRK’T OF (X)LUMBIA. 


“Par. 42. That ju'oprietors (»r owners of intelligenee oflices. iiiforii.atioii Ini- 
reaiis, registries, or employment oftices, hy wliatsoever name ealled. sliall laiy 
a license tax of ten dollars per annum. 

“Par. 43. That dealers in second-hand personal property shall pay a license 
tax of forty dollars per annum * * *. 

“Par. 44. Pawnbrokers shall continue to pay to the collec'.or (d’ taxes of 
the District of Columbia one hundred dollars for license * * *. 

“ Par. 45. Keepers of billiard, bagatelle, jenny lind, and ])ool tables, shufile- 
boards. or any table upon which legitimate games are played within the Dis¬ 
trict of Columbia for public use, or for profit or gain, shall continue to pay 
to the collector of taxes of the District of Columbia twelve dollars per annum 
license for each table * * *. 

“ Par. 46. An annual license tax is hereby imposed upon the following classes 
of business, trades, and professions, namely: Boarding houses (public), one 
dollar per room; claim agents, twenty-five dollars; building and other con¬ 
tractors, twenty-five dollars; carriage or wagon making establishments, twenty- 
five dollars; cigar dealers, twelve dollars; confectionery establi.shments, twelve 
dollars; dealers of every description in the several markets, except farmei-s 
and producers, five dollars; florists, fifteen dollars; land and improvement 
companies, fifty dollars; undertaking establishments, twenty-five dollars.” 

The decision of the Comptroller General is requested whether moneys re¬ 
ceived from license taxes represent revenue from an activity or source ap¬ 
propriated for by both the United States and the District of Columbia within 
the meaning of the provisions of the District appropriation act for 1923. 

10. Motor vehicle operator’s licenses: The amount collected under this bead¬ 
ing in the fiscal year 1922. all of which was credited to the revenues of the 
District of Columbia, was $34,652.50. 

Article 12, section 3-a, of the police regulations of the District <>f Columbia, 
provides: 

“(a) It shall be unlawful for any person or persons with the exception 
hereinafter named, to operate any motor vehicle of any kind, the motive power 
for which shall be electricity, steam, gas, gasoline, oil, naphtha, or other similar 
sources of energy, whether such vehicle is used as a public hack, truck, or for 
hire, or for private use for pleasure or for business, except railroad locomotives 
or electric street cars, until such pei-son has procured a pei-mit as hereinafter 
prescribed: * * *. 

“Any person desiring a permit to operate motor vehicles shall make ap¬ 
plication to the traffic bureau of the police department on the itrescribed 
form; * * * 

“The officer in charge of the traffic bureau of the Metropolitan i)olice de¬ 
partment shall cause all applicants to he examined as to tbeii* knowledge of 
the traffic regulations of the District of Golumhia and ability to ojicrate motor 
vehicles, and shall, if deemed necessary, require a practical demonstration as 
to ability to operate motor vehicles. 

“No permit to oi)erate motor vehicles shall be is.sued by the superintendent 
of licenses except upon the approval of the officer in charge of the traffic l)n- 
reau.” 

The same article, section 3g, provides : 

“ For each permit issued under the provisions of this section a fee of $2 shall 
be charged: Provided, That permits which have become worn and obliterated 
by use, but on which the name or number may be deciphered, shall be dupli¬ 
cated by the superintendent of licenses without charge: And provided further. 
That lost permits shall be duplicated on the payment of a fee of ,50 cents when 
the applicant is identified l)y his signature written in the presence of the 
superintendent of licenses, said signature to be compared with the original sig¬ 
nature on file in tlie office of the superintendent of licenses: or hy affidavit as 
to said loss.” 

The salaries and expenses of membei-s of the police department a.ssigned to 
the traffic bureau are paid from appropriations chargeable 60 per cent to the 
District of Columbia and 40 per cent to the United States. This is also true 
of appropriations for the license bureau. 

The decision of the Comptroller General is re(uiested whether inonevs paid 
for motor vehicle operators’ licenses is revenue derived from an activity or 
source appropriated for by both the United States and the District of Columbia 
within the meaning of the legislation contained in the District appropriation 
act for 1923. 


FISCAL FFLATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 107 


11. I'liiinl»ers' licenses: The niuouiit collected under this heading; for the 
fiscal year, all of which was credited to the District of Columbia, amounted 
to $89. 

The act of Congress ai;)proved .June 18, 1S98 (80 Stats., 477), provides, in 
jnirt, as follows: 

“That the ( commissioners of the District of Columbia he, and they are hereby, 
authorized to appoint a plumbing- hoard to be composed of two master plumbers, 
one .iourneyman plumber competent to be licensed as master plumber, and 
two emi)loyees of the District of Columbia having- a knowledge of plumbing' 
and gas fitting and sanitary work, whose compensation shall be three hundred 
«lollars pel* annum each, payable monthly. A majority of the board shall he 
deemed competent for action. 

“ Sec. 2. That in addition to siu-li advisory duties as said commissioners 
shall assign them, it shall be the duty of said plumbing board to examine all 
ai>plicants for license as master plumbers or gas titters and to i*epoi-t to said 
commissioners, who. if satisfied from such report that the applicant is a fit 
person to engage in the business of plumbing or gas fitting, shall issue a license 
to such person to engage in such business. 

“ Se('. 4. That the fee for a license as master plumber or gas titter shall he 
three dollars.” 

The District appropriation act for 1928 provides an appropriation of .$4r)0 
fur compensation at the rate of .$150 for each member of the plumbing board. 
l»ayable dn ])er cent by the I>istrict of ('olumbia and 40 per cent by tlu"^ 
United States. 

The decision of the (’omptroller General is requested whether money re¬ 
ceived from ])lunibers’ licenses is i-eveime derived from an activity or source 
ai)i>r(^i»riated for by both the United States and the District of Golumbia within 
the meaning of the provisions of the District appropriation act for 1928. 

12. Insurance taxes: The amount collected under this heading for the tiscal 
ye*ai- 1922. all of which was credited to the revenues of the District of Golumbia, 
was ,$192,809.22. 

Section 650 of the Code of Law for the District of Golumbia provides : 

*‘ Every insurance company and association doing business in the District of 
Columbia shall, through its local agents or representatives, furnish to the 
superintendent, during the month of January of each year, a statement of its 
business in said District, setting forth specilically the net amount of its 
premium receipts, the amount of losses paid, the amount of expenses in¬ 
curred, respecting the business done in the District during the calendar year 
next preceding, and said superintendent shall preserve a seimrate record of the 
same in his office for convenient reference, showing the ratio of such losses 
and expenses, respectively, to said premium receipts, and all insurance companies 
of every description, except mutual fire insurance companies, shall pay to the 
collector of taxes before March first of each year a sum equal to one and one- 
half per centum of said premium receipts of the last preceding calendar year, 
in lieu of all other taxes, except taxes upon real estate and any license fees 
provided for in sections six hundred and fifty-four and six hundred and fifty- 
five ; and upon the failure of any company to pay said taxes before March first, 
as aforesaid, the license of said company shall be revoked and a penalty of 
eight per centum per month shall be charged against said company, which, 
together with said taxes, shall be collected before said company shall be 
allowed to resume business.” 

In connection with this item 
approved March 4, 1922, entitled 


attention is invited to the act of Gongress 
“An act to regulate marine insurance in the 
District of Columbia, and for other purposes.” 

The decision of the Comptroller General is requested whether insui-ance 
taxes represent revenue derived from an activity or source appropriated for 
by both the United States and the District of Columbia within the meaning 
of the provisions of the District appropriation act for 1923. 

13. Market Rents—Eastern, Western, and Georgetown IMarkets: The total 
collected under this heading for the fiscal year 1922, all of which was credited 
to the revenues of the District of Columbia, was $14,698.73. Appropriations 
for .salarios, expenses, and maintenance of these several markets, contained in 
the District appropriation act for 1923, are payable 60 per cent by the District 
of Columbia and 40 per cent by the United States. 

The Eastern, AVestern, and Georgetown Markets were the property of the 
predecessor forms of government within the District of Columbia to that now 
existing- ajid came into the possession of the present municipal government 
under the provisions of the act of June 11, 1878. 


108 FISCAL EELATIONS BETWEEN U. S. AND DISTBK’T OF COLUMBIA. 


The United States did not participate financially in the accpiisition of tlie 
several sites nor in the construction of the market huildin^s. with the excep¬ 
tion of an appropriation of $80,OIK) made by the l^istrict appropriation 4i(^t 
for 1908 (84 Stats 1120) for an addition to the Eastern :Market, ot whica 
amount the United States paid 50 per cent. But all appropriations for main¬ 
tenance, salaries, and exjienses of the several markets from July 1, 

June 80, 1920, were paid 50 per cent each by the United States and the 1^‘strict 
of (ktlumbia, and since July 1, 1920, such appropriations have been paid (>0 i>er 
cent by the District and 40 per cent by the United States. As these markets 
were purely District property (excluding the appropriation of $80,000 referred 
to) the revenues received therefrom since July 1, 1878, have uniforml.\ gone 
wholly to the credit of the District and this practice during all that time has 
been concurred in by the accounting officers of the Treasury. iMoreo\er, Con¬ 
gress heretofore has recognized the District’s right in this respect p such 
market rents are not included in the several classes of funds which Congress 
by legislation passed from time to time has required be distributed in certain 
proportions between the United States and the District. 

The decision of the Comptroller General is requested whether rents received 
from the Eastern, Western, and Georgetown Markets, is revenue derived from 
an activity or source appropriated for by both the United States and the Dis¬ 
trict of Columbia within the meaning of the provisions of the District appro- 


]>riation act for 1928. 

14. Wholesale Producers ^Market: The amount received under this heading 
for the fiscal year 1928, all of which was credited to the revenues of the Dis¬ 
trict of Columbia, was $10,475.70. The appropriations for this market for 
1928 are payable 60 per cent by the District of Columlua and 40 per cent by 
the United States. The District appropriation act for 1907, approved June 27, 
1906 (84 Stats. 484) provides: 

“ For necessary labor and services required to clean the market houses and 
the hauling and sweeping of refuse from the sidewalks and streets at the 
Farmers’ l*rf)duce Alarket, south side of B Street, and the Wholesale Pro¬ 
ducers’ Alarket square on B Street northwest, and at the farmers’ market 
adjacent to the Eastern, Western, and Georgetown markets, respectively, in¬ 
cluding salai-y of watchman, necessary labor, and for hauling and incidental 
exi)enses connected therewith, as follows: Provided, That the amount remain¬ 
ing to the ci’edit of ‘ ^Miscellaneous trust fund deposits. District of Columbia, 
Wholesale TM’oducers' Market,’ after the payment of all bills cemtracted prior 
to July first, nineteen hundred and six, shall be transferred to the credit of 
the revenues of the District of Columbia and on and after .July first, nineteen 
hundred and six, all receipts of the Wholesale Producers’ ^Market, including 
the receipts for the occupation of the south side of B Street northwest, and 
the farmers’ street markets adjacent to the Eastern, Western, and George¬ 
town markets, respectively, be paid through the sealer of weights and measures 
to the collector of taxes, to the credit of the revenues of the District, weekly. 
And the commissioners are hereby authorized to make such reasonable charges 
for the use of space Jit the above-mentioned street markets as may be deemed 
just, but in no case shall the collections for such space and for laboi’, and the 
sweeping, cleaning, and hauling away of refuse at such space exceed the 
sum of ten cents i)er day for each space occupied, and the market masters of 
the several markets herein mentioned shall make such collections daily and 
make a return thereof, with a sworn statement, weekly to the sealer of weights 
and measures, who shall deposit the same with the collector of taxes to the 
credit of the revenues of the District of Columbia.” 

The District appropriation act for 1914, ajqu-oved IMarch 4, 1918 (87 Stats. 
94(0, ])rovid<‘s: 

“ For the erect on of sluJters on the open S])ace at the intersection of Ohio 
and Louisiana Avenues with Tenth and Twelfth Streets, bounded by Tenth and 
4'w(4fth and B and Little B Streets Northwest, known and designated as the 
Farmers’ prodm’e market, and the necessai’y paving in connection therewith, 
$.82,900; and the limitation of 10 cents per day for each space at the above- 
meidioned market contained in the act of June twenty-seventh, nineteen hundred 
and six. is hereby revoked, and the Commissioners of the District of Columbia 
are authorized to charge hereafter not to exceed 20 cents per day for each 
si)ace in accordance with the provisions of the aforesaid act.” 

See also act of Congress relating to Farmers’ Market (20 Stats. 702). 

Tl.e decision of the Comptroller General is requested whether rents of the 
Wholesale Producers’ Market is revenue derived from an activity or source 


FISCAL KELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 109 


api)r()i)ri}ited for by both tlie United States and the District of Columbia witliin 
llie meaning of tlie provisions of the District appropriation act for 1928. 

The forejroinj' 14 classes of funds represent the iniscellaneoiis moneys col- 
lect(‘d i\v the District, and until June 80, 1922, covered iido the Treasiiry of llie 
United States wholiy to the credit of the revenues of the District of Columbia. 
The only other item of tliis nature, but not considered in this report, are special 
assessments for street extensions and special assessments for the opening, 
widening, and straightening of alleys and minor streets. A])propriations for 
these i)urposes have always been required by law to be paid wholly from the 
revenues of the District of Columbia. The United States nev(U' having paid 
any part of such appropriations it follows that tlie United States is not entitled 
to any part of the assessments. Apiiropriations of the type in question are not 
used for jJiysical improvements of any kind, but for land acipiired for public 
use under condemnation proceedings. The appropriations for improvements 
are payable by the United States and the District and the assessnuaits returimble 
by reason thereof go into the Treasury in like proiiortions as the aiiproprial ions 
ai'C paid by the United States and the District. 

It may not be Jimiss to show in a brief way the legislation under which the 
United States has now come to share in the large number of miscellaneous rm*- 
enue items of the District. The organic act of June 11. 1878. provides: 

“And tlie (Amnnissioners of the District of Columbia shall have the power, 
subject to tlie limitations and provisions herein contained, to apply the tuxes 
and other revenues of said District to the ])ayment of the current expens(>s 
thereof, to the sui)i»ort of the public schools, tlie tire dei»artmeid, and the police, 
and for that purpose shall take possession and supervision of all necessary books. 
l)ai)crs. r(‘cords, moneys, credits, securities, assets, and account'^ belonging oc 
appertaining to the business or interests of the government of the District of 
(N)lumbia and exercise the duties, powers, and authordy aforesaid. 

It LS further provided in the said act: 

“And to the extent to which Congress shall approve such estimates (for 
current expenses, etc., of the District of Columbia) Congress shall appr<q)rlate 
the amount of tifty per centum thereof: and the remaining fifty per centum 
of such approved estimates shall be levied and assessed upon taxable property 
and privileges in said Disti’ict other than pi-operty of tlu' United States and of 
the District of Columbia. 

“All taxes collected sball be paid into the Treasury of the United States 
and the same as well as appropriations to l)e made by (’ongress afoi-e.said, 
shall be disbursed for the expenses of said District on iteinize<l vouchers, 
which shail have been audited and approved by the Auditor of the District of 
Columbia, and certiiied by the said commissioners or a majority of them. 

“And the accounts of said commissioners and the tjix collectors, and all 
other otlicers required to account, shall be settled by the accounting ollicers 
of the Treasury Department of the United States.” 

The ]>rovisi()ns of law above quoted are amplified and extended by the act 
approved July 1, 1882 (22 Stats. 144), as follows: 

“ That hereafter all moneys appropriated for the expenses of the Covern- 
ment of the District of Columbia, together with all revenues of the Distinct 
of Columbia, from taxes or otherwise, shall be dei)osited in the Treasury of 
the United States as required by the provisions of section four of an act, 
approved June 11, 1878, and shall be drawn therefrom only on i-equisition of* 
the Comnnssioners of the District of Columbia (except that moneys appro¬ 
priated for •interest and the sinking fund, shall be drawn therefrom on the 
r(‘({uisition of the Treasurer of the United States), such requisition specifying 
the ai)propriation upon which the same is drawn; and in no case shall such 
appro])riation be exceeded, either in re(piisition or expenditure. And the 
accounts for all disbursements of the commissioners of the said District, shnil 
be made monthly to the accounting ollicers of the Treasury by the Auditor 
of the District of Columbia, on vouchei-s certified by the commissioners, as 
now re(iHired by law.” 

Under the act of June 11, 1878, the District, beginning with .Inly 1, 1878, 
and until July 1, 1888, received credit for the entire amount of all miscel¬ 
laneous items of revenue. The first interruption to this right of exclusive 
ownership ai)peared in the District ai)propi‘iation act for 1889 (approved 
July IS, 1888) in which it provided: 

“That hereafter all fees collected by the inspector of gas and meters and the 
harbor master and amounts collected for leases of streets and reservafons and 
wharf charges shall be paid to the collector for payment into the Treasury to 
the credit of the United States and the District of Columbia in equal parts.” 


110 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The District appropriation act approved March 2. i.SSh (2r> Stats. SdS), 
required all moneys received from the sale of animals and niater'al of any 
sort to be paid into the Treasury to the credit of the revenues of the United 
States and the District in equal parts. 

The act of April 28, 1892 (27 Stats. 21), j-equired fees for water, .sewer, and 
gas permits to he paid into the Treasury to the credit of the United States and 
the District in equal parts. 

The act of April 20, 1906, to provide for the establishment of a public crema¬ 
torium in the District, made similar provision for fees received therefrom. 

Tlie District appropriation act approved IMay 18, 1910, required all unclaimed 
collateral held by the clerk of the police court for a period of two years and 
more to be paid into the Treasury equally to the credit of the United States 
and tlie District. 

The deticiency appropriation act approved March 4, 1911, and tlie District 
upproiiriation act approved jMarch 2, 1911, added additional items of revenue 
subject to equal division between the United States and the District. And this 
is also true of tlie District approiiriation act approved .lune 26, 1912, rhe leg.s- 
Jative act approved August 23, 1912, the deficiency appropriation act approved 
Alarcli 4, 1913, and subsequent appropriation acts. 

ll.^ siH'tion 10 of the District approiiriation ad approved .June 26. 1912, Con¬ 
gress made a general covering in of miscellaneous items of revenue distributal)ie 
between tlie United States and tlie District. This section provides: 

Section 10, on and after .July one, nineteen hundred and twelve, fees collected 
by tlie District of Columbia shall be paid into the Treasury of the United States 
and the D.’strict of Columbia in equal parts, as follows: Namely, fees of .superin¬ 
tendent of weights, measures, and markets; fees of surveyor's otlice; health- 
department fees; pound fees; fees for railing permits; fees for bu.lding per¬ 
mits; fees for electrical permits; bathing-beach fees; fees from imblic-conven- 
ieiice stations; fees for tax certificates ; fees of the municipal court: and fees 
collected by the liuilding inspection division on account of iiermits, certificates, 
and transcripts of record issued by the inspector of buildings; and the suridus 
fees of tin* recorder of deeds and re,gister of wills; rogether with the tuition of 
nonresident pup.Is in the i)ublic s(‘oois; and the tax of one-half of one (-ent 
paid by any street or other I'ailroad company for each passenger carried across 
the Highway Bridge: and tlie annual wheel tax on ail automobiles or other 
motor vehicles." 

Beginning with July 1, 1920, Congress changed the ratio of appropriation lia¬ 
bility by increas.ng the proportion to be borne by the District from .70 to 60 
per cent, and reducing the United States proportion from 50 to 40 per cent. 
Notwithstanding this change the United States continued to receive credit for 
50 per cent of items of miscellaneous revenue during the fiscal year 1921, but 
by the terms of the Disrict appropriation act for 1922, approved February 22, 
1921, this inequality was corrected, so that since July 1, 1921, the District has re 
ceived 60 per cent of the miscellaneous items of revenue. Section 7 of the act 
of Congress last mentioned iirovides: 

“ That on and after July 1, 1921, all fees, fines, and other miscellaneous items 
of revenue theretofore required by law to be paid into the Treasury of the 
United States to the credit of the United States and the District of Columbia m 
etpial i»arts shall be paid foi- eacli fiscal year into the Treasury of the United 
States to the credit of the United States and the District of Columbia in liu' 
.same proportions as appropriations for the expenses of the government of the 
District of Columi)ia for such fiscal year are paid from the Treasury of the 
United States and the revenues of the District of Columbia; and all collections 
on account of special assessments for public improvements for which assess¬ 
ments are levied according to the law shall be paid into the Treasury of the 
United States to the credit of the United States and the District of Columbia in 
tin' same i)i-oportions as the ai)proi)riat:ons used in paying for such assessment 
work are charged, respectively, against the revenues of the District of Columbia 
and the Treasury of the United States.” 

In connection with the above section 7, attention is invited to the discussion 
bearing thereon before the subcommittee of the House Committee on Appro- 
l)riations in charge of tiie 1923 District appropriation bill, page 1372, et se(i. 

In order that the item for “ Motor vehicle tags,” the first considered in this 
report, may be more fully understood, and the action of Congress in requiring 
such moneys to be i)aid 40 per cent to the United States, not unduly magnified ;n 
tlu' c(»ns'deration of and conclusions reached regarding the several other irems. 
it may be well to go further into that sub.ject. 


laSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. Ill 


The District of Columbia appropriation act for 1918, approved March 3, 1917, 
tixes, to be effective after December 31, 1917, certain taxes to be paid by owners 
of motor vehicles, based upon horsepower. The tax paid includes the furnish¬ 
ing of identification tags and registration of the vehicle. It appears from state- 
nients made to me by a member of the subcommittee in charge of the District 
bill tor 1923 that in drafting rhe forego ng section 7 it was tlie opinion that 
the tax imposed upon owners of motor vehicles was intended primarily as a re¬ 
imbursement for the wear and tear to improved streets, and as improvements 
to all streets were made from appropriations payable in part by the United 
State's, and this being tlu' ease the Unitoel States ^^'as equitably entitled to a 
s luiljir ]»er ceiu <'f such taxes collected. 

D. J. Donovan, 

Auditor of the District of Columbia. 


MK.MOll.VXin'M 


OF LAWS ItKLATINei TO COI.LFX'TION .V.M) DISTIUHUTION OF VAltFOUS 

rrE:Ms of aEVExrE of the distkict of coltxmbia. 


I'lie act of Congress appi'oved June 11. 1878, b.v the terms of which the 
present form of government in the District of Columbia was created, provides: 

"And the (Annmissioners of the District of Columbia shall tiave the power, 
subject to the limitations and provisions herein contained, to apply the taxes 
and other revenues of said District to the payment of the current expenses 
thereof, to the SFipport of the public schools, the fire department, and the police, 
and for that purpose shall take possession and supervision of all necessary 
books, papers, records, moneys, credits, securities, assets, and accounts belong¬ 
ing or appertaining to the business or interests of the government of the Dis¬ 
trict of Columbia and exercise the duties, powers, and authority aforesaid.” 

It is further provided in said act: 

"And to the extent to which Congress shall approve such estimates (for cur¬ 
rent expenses, etc., of the District of Columbia) Congress shall appropriate the 
amount of tifty per centum thei’eof. 

"And the remaining fifty pei- centum of such approved estimates shall be 
levied and assess(‘d upon taxable ])roperty and privileges in said District other 
than property of the United States and of the District of Columbia. 

"All taxes collected shall be paid into the Treasury of the United States, and 
the same, as well as appropiuations to be made by Congress aforesaid, shall be 
disbursed for the expenses of said District on itemized vouchers which shall 
have been audited and approved by the auditor of the District of Columbia 
and certified by the said commissioners or a majority of them. 

"And the accounts of said commissioners and the tax collectors and all othei- 
officers required to account shall be settled by the accounting officers of the 
Treasury Department of the United States.” 

ddie provisions of law above quoted are amplified and extended by the act of 
Congress approved July 1, 1882 (22 Stats. 144), as follows: 

“ That hereafter all moneys appropriated for the expenses of the Coverninent 
of the District of Columhia, together with all revenues of the District of 
Columbia from taxes or otherwise, shall be deposited in the Treasury of the 
United States as required by the provisions of section four of an act, approved 
June 11, 1878, and shall be drawn therefrom only on requisition of the Com¬ 
missioners of the District of Columbia (except th.-it moneys aitpropriated for 
interest and the sinking fund shall be drawn therefrom on the requisition of 
the Treasury of the United States), such requisition specifying the apjiropria- 
tion upon which the same is drawn ; and in no case shall such ap])ropriation be 
exceeded, eithei- in recpiisition or expenditure. And the accounts for all dis¬ 
bursements of the commissioners of said District shall be made monthly to the 
accounting officers of the Treasury by the Auditor of the District of Columbia, 
on vouchers certified by the commissioners, as now required by law.” 

The following provisions of law, beginning with .July 18, 1888, to the present 
time, have been passed by Congress requiring the distribution of certain mis¬ 
cellaneous items of revenue between the United States and the District of 
Columbia : 


(iAS AND meters, LEASES OF STItEETS, WHAKVES, RESERVATIONS AND WHARF CHARLES. 

"That hereafter ail fees collected by the inspedor of gas and meters and 
* the harbor-master and amounts collected for leases of streets and reservations 
and wharf charges shall be i»aid to the collector for payment into the Treasury 



112 FISCAL Ei:LATrONS BETWEEN U. S. AND DISTRICT OF (JOLUMBIA. 


to the credit of the United States and the District of (.’olunihiM in e(nial i)arts.”^ 
(District of Columbia appropriation act, api)roved July 18, 1888.) 

WASHINGTON MARKET CO., RENTAL. 

“ Deposited as amounts collected for leases of streets and reservations * * 

into the Treasury to the credit of the United States and the District of (’olum- 
hia in equal parts.’* (District of (.’olumhia ai)proi)riation act, ap])roved July 
18, 1888.) 


SALE OF OLD MATERIAL-SURPLUS FUND, UNEXPENDED DALANCES DISTRICT 

APPROPRIATION S. 

“That hereafter any moneys received from the sale of animals or material of 
any sort purchased under appropriations for the District of Columbia since July 
first, eighteen hundred and seventy-eight, othei- than the water department, 
shall be paid into the Treasury of the United States, to the credit of the United 
States and the District in equal parts; and all balances of appropriations that 
have been heretofore made or that shall be made hereafter for the District of 
Columbia under section three of the act of June eleventh, eighteen hundred and 
seventy-eight, entitled ‘An act providing a permanent form of government for 
the District of Columbia,’ heretofore or hereafter renmining unexpended at the 
end of two years from the close of the fiscal year for which such appropriations 
have been or shall be made shall be covered into the Treasury, one-half to the 
credit of the surplus fund and one-half to the credit of the general fund of the 
District of Columbia.” (Act of March 2, 1889; 25 Stat. 808.) 


WATER, SEWER, AND GAS PERMITS. 


“That the fees authorized by this section shall be paid to the collector of 
taxes of the District of Columbia and by him deposited in the Treasury of the 
United States, one-half to the credit of the United States and one-half to the 
credit of the District of Columbia.” (Act of April 28. 1892; 27 Stat. 21.1 

PUKLIC CREMATORIUM. 

“All fees collected under the provisions of this act shall be paid to the col¬ 
lector of taxes of the District of Columbia, and be by him deposited in the 
Treasury of the United States, one-half to the credit of the United States and 
one-half to the credit of the District of Columbia.” ('Act to provide for the 
establishment of a public crematorium in the District of Columbia and for other 
inirposes, approved April 20, 1900.) 


]MONROE STREET RRTDGE, RROOKLAND. 


“That no street railway company shall use the bridge herein authorized for 
its tracks until such company shall have paid to the Treasurer of the United 
States a sum equal to one-sixth of the total cost of said bridge, one half thereof 
to be credited to the United States and the other half to the credit of the 
District of Columbia.” (District of Columbia approiiriation act. approved 
March 2, 1907.) 

ROAD ALONG SOUTH 1L\NK OF ANACOSTIA RIVER. 

“That one-half of the amount found to be due and awarded as damages for 
and in receipt of the land condemned for said road, together with the costs and 
expenses of the proceedings, shall be assessed by the jury as benefits * * * 

and a sufficient amount to pay for the land taken hereunder is herebv ai>pro- 
liriated, one-half to be paid out of the revenues of the District of Columbia and 
one-half out of any moneys in the JT-easury not otherwise approjn-iated.” 
“The costs being paid half-and-half, the assessments are jirepaid in like i>ro- 
portion.” (Public act No. 83(), approved March 4, 1909.) 


LAND NEAR CONNECTICUT AVENTTE BRIDGE, BEL]MONT ROAD 

WATERSIDE DRIVE. 


TO C.VLVERT STltEET AND 


“ The amounts assessed for benefits to be paid'to the District of Columbia and 
covered into the Treasury to the credit of the revenues of the District of Co¬ 
lumbia and the United States’in-equal parts.” (Public act No 7.8 apnroved 
March 2, 1910.) 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 113 


EXTENSION OF NINETEENTH STREET FROM BELMONT ROAD TO BTLTT^IORE STREET— 

AMOUNT APPROPRIATED FOR COSTS, ETC. 

t 

“ To be repaid to the District of Columbia from the assessments for benefits 
and covered into the Treasury to the credit of the revenues of the District of 
Columbia and the United States in equal parts.” (1‘ublic act. No. 184, ap¬ 
proved May 18, 1910.) 

POLICE COURT UNCLAIMED COLLATERAL. 

“ Hereafter all moneys remaining in the hands of the clerk of the police 
court for a period of two years and more which claim or demand has not been 
made by the persons entitled thereto, shall be paid over by the said clerk to 
the collector of taxes of the District of Columbia, and by him deiiosited in the 
Treasury to the credit of the revenues of the District of Columbia and of the 
United States in equal parts.” (District of Columbia approjiriation act, ap¬ 
proved May 18, 1910.) 

CEDAR STREET SUBWAY AND BHIDOE. 

” * * * That no street railway shall use the subway herein authorized 

for its tracks until such company shall have paid to the Treasurer of the United 
States a sum equal to one-fourth of the total cost of said subway and bridge, 
one half thereof to be created to the United States and the other half to be 
credited to the District of Columbia.” (District of Columbia appropriation act, 
a]iproved IMay 18, 1910.) 

ASSESSMENT AND PERMIT WORK. 


On and after July first, nineteen hundred and eleven, all collections for 
work done under the assessment and permit system shall be deposited by the 
collector of taxes in the Treasury of the United States to the credit of the 
revenues of the United States and the District of Columbia in like proportion 
as the said revenues were charged with the appropriations provided for the 
respective juirposes.” (District act, approved March 2. 1911.) 

SALE OF DISTRICT REGULATIONS. 


“ * * * such publications shall only be disposed of by sale at not 

than the cost price and the per centum thereof; and all moneys received from 
the sale of said regulations shall be jiaid into the Treasury of the United States 
to the credit of the District of Columbia and the United States in (Yiual ]>arts.” 
(Deticiency appropriation act, approved March 2, 1911.) 


INTERIOR PARK. 

“ That of the amount found due and awarded by the .lury in said condemna¬ 
tion proceeding as damages for and in respect to the land to be condemned, 
j)lus the cost and expense of said proceeding, not less than one-third thereof 
shall be assessed by the jury as benefits.” 

This appropriation being payable half-and-half, the as'sessments for benefits 
are being deposited in like proportion. (District of Columbia appropriation act, 

■ approved March 2, 1911.) 

WORKHOUSE SALES. 

“ That the Commissioners of the District of Columbia are hereby authorized, 
under such regulations as they may prescribe, to sell to the various depart¬ 
ments and institutions of the government of the District of Columbia the 
l)roducts of said workhouse, and all moneys derived from such sales shall be 
paid into the Treasury, one-half to the credit of the United States and one- 
half to the credit of the District of Columbia.” (District appropriation act, 
approved March 2, 1911.) 

STREET P:XTENSI0N ASSESSMENTS CONTINUED. 

“Extension of Q Street NW.: That the entire amount found to be due and 
awarded by the jury in said proceedings as damages for and in respect of 
the land to be condemned for said widening and extension, plus the cost and 


114 FISCAL RKIATrONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


expenses of said proceedings, shall be assessed by the jury as benelits * * *. 

The assessments for benefits, when collected, to be covered into the Treasury 
in equal parts to the credit of the revenues of the District of Columbia and 
the LTiited States.” (District of Columbia appropriation act, approved IMarch 
2. 1911.) 

LANIEK PLACE AND EIGHTEENTH STREET. 

” That of the amount found to be due and awarded by the jury in said pro¬ 
ceedings as damages for and in respect of the land to be condemned for the 
extension of Lanier Place,, Eighteenth Street, and the connecting streets above 
described, plus the cost and expenses of the proceeding taken thereto, not less 
than two-thirds shall be assessed by the jury as benefits * * * 'j'pe 

amounts assessed as benefits when collected shall be covered into the Treasury 
to the credit of the revenues of the District of Columbia and the United States 
in equal parts.” (District of Columbia appropriation act. approved jNIarch 
2, 1911.) 


REIMDURSEAIENT OK THE UNltED 
HALF-AND-HALF. FOl! EXTENSION 


STATES. ACCOUNT ilONEYS PAID OUT CHAlUiE)) 
OF WATI:K :SfArNS to CON(iRKSS HEICH'JS. KTI’. 


“The water department is required to reimburse the United States its half 
of certain appropriations advanced lor extension of water mains to Congi’ess 
Heights, Benning, and the Conduit Hoad, appropriated during the fiscal yeai’s 
]911 and 1912,” said reimbursement being n'quired by District of (V)luml) a 
appropriation act, ai)prove(l June 20. 1912. 


SUPKEilE COURT. 

“That on and after July first, nineteen hundre<l and twelve, the suri)lus 
fees collected by the clerk of the Supreme (’onrt of the Distrid of (’olund»ia 
shall be deposited in the Treasury, one-lialf to the credit of the District of 
Columbia.” (Legislative act, approved August 28. 1912.) 

COURT OF APPEALS. 

That on ; ml aftei- July first, nineteen hundred and twelve, the fees col¬ 
lected by the clerk of the Court of Appeals. District of Columbia, shall be de¬ 
posited in the Treasury, one-half to the credit of tlie District of (’ohnnhia." 
(Legislative act, approved August 28. 1912.) 

TUITION, NONP.ESIDENT PUPILS. PUiU.lC SCHOOLS. 


“ Pupils shall not be admitted to or taught free of charge in the i)ublic 
schools of the District of Columbia. /h-or/dcd, JJiat any other non¬ 

resident pupil may be admitted to and taught in said public schools on the i)a.\ - 
ment of such amount, to be fixed by the board of education with the approvii! 
of the Commissioners of the District, - * * and all payments hereunder 

shall be paid into the Treasury of the United Static, one-half to the credit (/f 
the United States and one-half to the credit of the District of (’olumbia.” 
( District of Columbia appropriation act, approved .lune 2(5. 1912.) 

“Sec. 10. Dn and after July first, nineteen hundred and twelve, fees 
collected by the Distinct of ('oliunbia shall be paid into the Treasury of the 
United States and tlie District of (\dumbia in equal jiarts, as follows, namely 
fees of superintendent of weights, measures, and markets: fees of surveyor’'s 
office; health department fees: iiound fees: fees for railing permits; fee.s for 
building permits: fees for electincal permits; bathing beach fees; fees from 
public convenience stations; fees foi- tax certificates; fees of the munici])al 
court; and fees collected by the imilding inspection division on account ol^ 
permits, certificates, and transcripts of record issued bv the inspector of 
buildings; and the surplus fees of the recorder of deeds aiid register of wills- 
together with the tuition of nonresident pupils in public schools and the 
tax of one-half of one cent paid by any street or other railroad company for 
each passenger carried across the Highway Bridge; and the annual wheel 
tax on all automobiles or other motor vehicles.” ( District of ('olumbia apiiro- 
priation act, approved June 2G, 1912.) 


FlSCiU. RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 115 


KElMIUntSEMKNTS A('('()r.\T (SOAKl) AND CAKE OF INSANE. 

“ Hereafter all collections oi- reiinbiirsenients on account of charges paid or 
payable by the District of Coliuubla for the care and support of the insane 
of said District at the Government Hospital for the Insane shall be made 
to the Commissioners of the District of Columbia and covered into the 
Treasury of the United States to the credit of the revenues of the Unitetl 
States and the revenues of the District of Columbia in equal pai'ts.” (De- 
liciency appropriation act, approved March 4, 1913.) 

STKEET IJGIITING ALONG LINES OF STEAM RAILKOADS. 

Street lighting along railroad lines, other than street railroads, required to 
be paid for by companies, moneys received therefrom are credited to appropria¬ 
tions for lighting; that is, half and half.” (District of Columbia appropriation 
acts, approved May 26, 1908, and March 4, 1913.) 


PENNSYLVANIA AVENUE BRIDGE .\CROSS ROCK CREEK. 

Capital Traction Company shall after the completion of said bridge pay 
into the Treasury of the United States, one-half to the credit of the United 
States and one-half to the credit of the District of Columbia, n portion of the 
total cost of said bridge * * * equal to one-third thereof. (District of 

Columbia appropriation act, approved March 4, 1913.) 


REPAIRING PAVEMENTS OF STREET RAILWAYS WHEN NECESSARY. 

aiiiounts thus expended shall be deposited to the credit 
■of the appropriation for the tiscal year in which they are collected”—that is, 
deposited half and half. (District of ('(Mumbia appropriation act, ai)proved 
July 21, 1914.) 

CONSTRUCTION AND REPAIR OF RAILWAY BRIDGES. 

“ = 1 = « =;= Appropriation available for repairing etc. and the 

amount thus expended shall be collected from such railway * * * and 
shall be deposited in the Treasury to the credit of the United S'ates and the 
District of Columbia in equal parts—that is, half and half.” (District of 
Columbia ai)propriation act, approved .July 21, 1914.) 

PAVING ROADWAYS-SO-CALLED BORLAND Ai[END:Mi:NT. 

“ * * * And such assessments, when collected, shall be deposited in tlu‘ 

Treasury of the United Stares to the credit of the United States and lg.-. 
trict of Columbia in equal parts.” (Act July 21, 1914—!> strict of C 
act. 1915, Appendix.) 


the r)is- 
oluinbla 


BENNING ROAD VIADUCT AND BRIDGE. 


“ That the cost of constiTicting said viaduct and bridge, including approaches 
thereto, shall be borne and paid one-half by said railroad companies hi pro¬ 
portion to the Midths of their respective rights of way * * * to the 
Treasurer of the United States, one half to the credit of the District of Colum¬ 
bia and the other half to the credit of the Ihiited Sta'es * * * and any 

* * * change * * * in tracks of Washington Rahway and Electri*’ 
Company ❖ * * shall be made by and at the cost of sairl lail^^a^ com¬ 
pany * * * and in event of refusing to do such woilc the same shall hr- 
•done bv the Commissioners of the District of Columbia * and codec ed 

*' * and pahl into the Treasury - * * one-half to the credit of the 

United States and one-half to the credit of the District of Columbia.” (Dis¬ 
trict of Columbia appropriation act, approved July 21. 1914.) 

WORKHOUSE AND REFORMATORY SALES, 

“ The commissioners are authorized, under such regulations as they may 
pre.scribe, to sell to the various departments and institutions of the govern¬ 
ment of Vhe District of Columbia the products of said workhouse and said 


116 


FISCAL RELATIONS BETWEEN U. S. 


AND DISTRICT OF COLUMBIA.. 


reformatory, and all moneys dcndved from such sales slmll lx* paid into the 
Treasury, one-half to the credit of the United States and one-half to the credit 
of the District of Columbia.” (District of Columbia sippropriation act for 
1916, approved jMarch 3, 1915.) 

STKEET KAILWAYS CROSSING BRIDGES. 


Krid;.;es: For construction and repairs, includinj; not excx'edinjA' $23,090 for 
I’eplacement of two trusses and lioor of the M Street Bridjje ai'ross Rock Creek. 
$45,000. This appro])riation shall be available for repairing? when necessary 
any hridfi’e carrying a public street over the ri^ht of way or ])i-operty of any 
railway company, and the amounts thus expended shall be collected from such 
railway comi>any in the manner provided in section five of an act providinj; 
a permanent form of jicovermnent for the District of Columbia. aiti)roved Juru' 
eleventh, eighteen hundred and seventy-eight, and shall be deiiosited in the 
Treasury to the credit of the United States and the District of (M»lumbia in 
equal i>arts.” (District of Columbia appropriation act for I9IT. ajiproved 
September 1, 1916.) 


LAND SOLD TO B.M.TIMORE A- OHIO RAILROAD COMPANY. 

“The Clonimissioners of the District of Columbia are hei-eby authorized 
and directed to sell and convey the land contained in the old right of way of 
the Baltimore and Ohio Railrojid Company within the limits of square eight 
hundred and tifty-seven. in the city of Washington, bounded by Sixth and 
Seventh, I and K Streets northeast, for cash, at a price to be tixeil by said 
commissioners based upon the true value of said land as determined by the 
board of assistant assessors of the District of Columbia, to a person or per¬ 
sons designated by the owners of the majority of the proi)erty in said square, 
and the money derived from the sale lierein authorized shall he deposited 
in the Treasury, one half to the credit of the United States and the other 
half to the credit of the District of Columbia: Provided, That before the sale 
herein authorized is made there shall be set aside so much of said land as said 
commissioners may deem necessary to complete the system of public alleys 
in said square, and the land thus reserved shall not be included in the sale 
herein authorized: And provided further. That such sale shall be consummated 
within a period of two yeai*s from and after the date of the approval of this 
act.” (District of Columbia appropriation act for 1917. approved September 
1. 1916.1 

VAULT SPACE. 

) 

“ Sec. 7. That hereafter the Commissioners of the District of Columbia are 
authorized and directed to assess and collect rent from all users of sqRice 
occupied under the sidewalks and streets in the District of Columbia, which 
said space is occupied or used in connection with the business of said users.” 
(District of Columbia appropriation act, 1917, ai)proved September 1. 1916.) 

SOUTH DAKOTA AVENUE BRIDGE. 


“ For constructing a bridge to carry vehicular and pedestrian trafiic, in th(‘ 
line of South Dakota Avenue, over the tracks of the Washington Branch of 
the Baltimore and Ohio Railroad, all in accordance with plans approved by 
the Commissioners of the District of Columbia, $65,000. And the said com¬ 
missioners are authorized to enter into a contract with the said railroad com- 
l)any, or other parties, for the construction of such bridge and approaches: 
Provided, That such portion of this cost shall be borne by the Baltimore and 
Ohio Railroad Conqiany as is provided in section ten of an act entitled “An 
act to provide for a union railroad station in the District of Columbia, and 
for other purposes.” apiiroved February twenty-eighth, nineteen hundred and 
three, and said sum shall be paid by said company to the Treasurer of the 
United States, one half to the credit of the District of Columbia and the other 
half to the credit of the United States, and the same shall be a valid and sub¬ 
sisting lien against the franchises and property of the said Baltimore and 
Ohio Railroad ('"onqiany, and shall be a legal indebtedness of said company in 
favor of the District of Columbia, jointly for its use and the use of the United 
States as aforesaid, and the said lien may be enforced in the name of the 
District of Columbia by bill in equity brought by the commissioners of the 


FISCM. PvKLATIONS BETWEEX U. S. AND DISTRICT OF COLUMBIA. 117 


,s*ai(l District in the Supreme Court of said District or by any other lawful 
ju’oceediug af^aiust the said Baltimore and Ohio Railroad Company: Provided 
further. That no street railway compjiny shall use the bridge herein authorized 
for its tracks until such company shall have paid to the Treasurer of 
United States^ a sum ecpial to one-sixth of the total cost of said bridge, 
half thereof to he credited to the United States and the other half to 
credit of the District of Columbia.” (District of Columbia appropriation 
for 1918, approved March 3, 1917.) 


the 

one 

the 

act 


niseosAL OF city iskfi'sk. 

“ Provided, That any i)roceeds re(.'eived from the dis])osal of city refuse or 
garbage shall be paid into the Treasuiy of the Ihdted States to the credit of 
the United States and the District of (-olumbia in equal parts.” (District of 
Columbia ai>propriation act for 1919. ai)proved August 31, 1918.) 

IIOAFE FOH A(iKl) AM) INFllCM-Srill'LI'S PIJODFCTS. 

“ The commissioners are authorized, under such regulations as they may 
prescribe, to sell the surplus i)roducts of the Home for the Aged and Intirm. and 
all moneys derived from such sales shall be paid into the Treasury, one-half 
to the credit of the United States and one-half to the credit of the District of 
Columbia.” ' (District of Columbia appropriation act for 1919, approved August 
31. 1918.) 

INSPECTION OF PASSEN(JEll EEEVATOPS. 


The Commissioners of the District of Columbia are authorized and directed, 
from time to time, to prescribe a schedule of fees to be paid for inspecting pas¬ 
senger elevators and for inspecting hotels, public halls, moving-picture shows, 
theaters, and other places of amusement wbidi are required to have annual 
licenses, and for inspecting buildings which are required by law to have lire 
escapes; and they are farther authorized and directed to impose fees for all 
inspections or service to be i)erformed by any public officer or employee of the 
District of Columbia under any law or regulation now in force or hereafter 
enacted; said fees to cover the co.st and exi)ense of such inspections or service; 
and a schedule of such fees shall be i^rinted and (*onspicuously displayed in the 
office of the said commissioners, and said fees shall be paid to the collector of 
taxes. District of Columbia, and deposited in the Treasury of the Ihiited 
States to the credit of revenues of the District of Columbia and the Ihiited 
States in equal i)arts.” (District of (’olumbia appropriation act for 1920, ap¬ 
proved July 11, 1919.) 

HOME FOK AOEl) AND INFIKM-SALE OF SUP,PLUS PUODUCTS. 

“ Hereafter the commissioners are authorized, under such regulations as they 
may pre.scribe, to sell the surplus products of the Home for the Aged and 
intirm. All moneys derived from such sales shall be paid into the Treasury of 
the United States to the credit of the United States and to the crdit of the 
District of Columbia in the same proportions as the appropriations for such 
institution are paid from the Treasury of the United States and the revenues 
of the District of Columbia.” (District of Columbia appi'opriation act for 
1921. ai)proved June o, 1920.) 

TNDL'STKIAL HOME SCHOOL FOE COLOKEU CIIILDKEN. 

All moneys received at said school, as income from sale of products and 
from payment of board or of instruction, or otherwise, shall be paid into the 
Treasury of the United States to the credit of the United States and to the 
credit of the Distinct of Columbia in the same proportions as the appropriations 
for such institutions are paid from the Treasury of the Unit(M States and the 
revenues of the District of Columbia.” (District of C’olnmbia appropriation 
act for 1921. approved June 5, 1920.) 

WORKHOUSE AND REFOlUMATORY-SALE OF SUUPIA’S PRODUCTS. 

“ Hereafter the commissioners are authorized, under such regulations as 
thev may prescribe, to sell the surplus products of the workhouse and the re¬ 
formatory* All moneys derived from such sales shall be paid into the Treasury 


118 FISCAL Rp:LATr()NS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


of the LTiiited States to the credit of the United States and to the credit of the 
District of Columbia in the same proportions as the appropriations for such in¬ 
stitutions are paid from the Treasury of the United States and the revenues of 
tlie District of Columbia.” (District of Columbia api)ropriation act for 1921, 
approved June 5, 1920.) 


illSCELLANKOUS HEFl’SK SALES. 

“And the said commissioners are further authorized, if in their opinion such 
action shall be to the best interests of the District of Ojlumbia, to hereafter 
conduct any or all of the operations involved in the collection and disposal of 
<*ity refuse of every kind as municipal functions, and for that puritose to pur¬ 
chase or lease the necessary plants, buildings, and land, to i)urcha.se or hire 
horses and horse-drawn vehicles, passenger-carrying and other motor-propelled 
vehicles, equipment, and* machinery, and to employ expert and othei* personal 
services, and labor, and to pay traveling, maintenance, incidental, and con¬ 
tingent expenses: Provided, That products arising from such operations con¬ 
ducted as authorized herein may be sold and the proceeds arising therefrom 
shall be paid into tbe Treasury of the United States to the (Tedit of the United 
States and the District of Columbia in equal parts.” (Deticiency appropriation 
act, approved July 11, 1919.) 


DISPOSAL OF CITY REFUSE. 

” "that any proceeds received fi'om the disposal of city refuse or garbage shall 
be paid into the Treasury of the United States to the credit of the United States 
and the District of Columbia in the same proportions as the appropriations for 
such purposes are paid from the Treasury of the United States and the revenues 
of the District of Columbia.” (District of Columbia appropriation act for 1922, 
approved February 22, 1921.) 

SALE OF ABAXDOXED SCHOOL PROPERTY. 

“ Tbe (’ommissioners of the District of Columbia are authorized and em¬ 
powered to sell to the highest bidder at i)ublic auction the following-named 
l)iT.perty belonging to the said District of Columbia, in the District of Colum- 
i)ia : Lots 821 and 822 in square 30G4. togethei’ with all improvements thereon: 
Proi'ided, That if. in the opinion of the said commissioners, the highest bid 
made at said sale for any or all of said lots and improvements thereon is not a 
full jind fair price for the same, the said commissioners shall have the right 
to reject such bid or bids and shall have the right to sell said property, after 
due advertisement, to the highest bidder under competitive proposals for the 
purchase of sahl property; and that the proceeds of the sale of said lots and 
improvements thereon shall be paid into the Treasury of the United States to 
the credit of the United States and the District of Columbia in equal parts.”' 
(District of Columbia appropriation act for 1922, approved February 22. 1921.) 


INDTTSTRIAL HOME S(’HOOL FOR COLORED CHILDKEX. 

“ Ill all. Industrial Home School for Colored Children. $31,4(X). All moneys 
received at said school, as income from sale of products and from payment of 
board or of instruction, or otherwise, shall be paid into the Treasury of the 
United States to the credit •)f the ITiited States and to the credit of the District 
of Columbia in the same proportions as the appropriations for such institutions 
are paid from the Treasury of the United States and the revenues of the Dis¬ 
trict of Columbia.” (District of Columbia appropriation act for 1922, approved 
February 22, 1921.) 

MISCELLANEOUS ITEMS OF REVENUE. 


” Sec. 7. That on and after July 1. 1921. all fees, tines, and other iir’scellaneous 
items of revenue theretofore required by law to be paid into the Treasui-y of 
the United States to the credit of the United States and the District of Coium- 
bia in equal parts shall be ]>aid for each tiscal year into the Treasury of the 
United States to the credit of the United States and the District of Columbia 
in the same proportions as appropriations for the expenses of the government 
of the District of Columbia for such fiscal year are paid from the Treasury of 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 119 


the United States and the revenues of the District of Columbia; and all col¬ 
lections (HI account of special assessments for public improvements for which 
assessments are levied according to the law shall be paid into the Treasury of 
the United States to the credit of the United States and the District of Colum¬ 
bia in the same proportions as the appropriations used in paying for such 
assessment woi-k are chargeil. resi^ectively, against the revenues of the District 
of Columbia and the Treasury of the United States.” (District of Columbia 
appropriation act for 1022. api)roved February 22, 1921.) 

“And that from and after June 30, 1922, any and all revenue derived from 
property not owned wholly or in part by the District of Columbia, as between 
the United States and the District of Columbia, shall be the property of the 
United States; and that after June 30, 1922, where the United States is the 
owner of ground or the holder thereof in trust for the public, upon which im¬ 
provements have been made at the joint expense of the United States and the 
District of Columbia, the revenues therefrom shall first be used to pay the 
United States 3 per centum of the full value of the ground as a ground rent, and 
the remainder shall be divided between them in the same proportion that each 
contributed to said improvements, and for such purposes the assessor for the 
District of Columbia shall fix the full value of the ground after he has first 
made oath that he will fairly and impartially appraise the same; and that 
after June 30, 1922, any revenue derived from any activity or source what¬ 
ever, including motor-vehicle license, not otherwise herein disposed of, which 
activity or source of revenue is appropriated for by both the United States and 
the District of Columbia, shall be divided between the two in the same propor¬ 
tion that each has contributed thereto.” (District of Columbia appropriation 
act for 1923, approved June 29, 1922.) 

COLUMBIA HOSPITAL FOE WOMEN. 

“ For general repairs and for additional construction, including labor and ma¬ 
terial for each and every item connected therewith, $5,()00; for expenses of heat, 
light, and power required in and about the operation of the hospital, $15,(){)0; 
in all, $20,000, to be expended in the discretion and under the direction of the 
Architect of the Capitol, and on July 1, 1922, the sum of $25,000 of the surplus 
revenues of the hospital shall be deposited and covered into the Treasury of the 
United States to the credit of the United States and to the credit of the District 
of Columbia in the same proportions as the appropriations for such institution 
are paid from the Treasury of the United States and the revenues of the Dis¬ 
trict of Columbia.” (District of Columbia appropriation act for 1923, approved 
.June 29, 1922.) 




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REPORT OF EARL TAGGART. 


General Accounting Office, 

State and Other Departments Division, 

January 17, 

Hon. Lawrence C. Phipps, 

Chairman Joint Select Committee on District of 

Columbia Fiscal Relations, United States Senate. 

Sir: In compliance with your request of the 11th instant, the following com¬ 
ments are submitted with reference to the report of Messrs. Haskins & Sells on 
their examination of matters affecting the fiscal relations between the United 
States and the District of Columbia : 

Pursuant to instructions given me by your committee last summer, I have 
endeavored to follow the work done by your accountants through daily con¬ 
ferences with Mr. B. P. Hill, in charge of the audit. T believe tlie work was 
done in a logical and thorough manner, and am pleased to note that the balance 
found to the credit of the District on June 30, 1922, is in practical agreement 
with that found by the General Accounting Office and the auditor District of 
Columbia. 

In addition to matters affecting the actual charges or credits in the District’s 
account with the United States, this report calls forcible attention to the very 
unsatisfactory conditions obtaining in several offices. It is believed these con¬ 
ditions can be remedied by the proper functioning of the Comptroller General 
with the cooperation of the offices involved under section 309 of the Budget 
and accounting act (42 Stat. 25), unless Congress desires to take specific action 
to correct these conditions. 

It is to be regretted that Messrs. Haskins & Sells have not made specific 
recommendation of the amounts to be charged against the District or credited 
to it, but it is noteil that certain items in their opinion should be considered by 
the committee. These items are as follows: 

A. Taxes uncollected at June 30, 1878: On page 49, Haskins & Sells report 
that $1,622,739.75 of taxes uncollected June 30, 1878, including penalties, was 
subsequently collected and deposited to the credit of the District, 

It would seem equitable that this amount should be applied to the liabilities of 
the District accrued before the United States began to share in the expenses of 
the District unless Congress subsequently assumed liabilities accrued on the 
date when the organic act became operative. However, attention is invited to 
paragraph G of section 3 of the organic act, as follows: 

“ 6. All taxes heretofore lawfully assessed and due or to become due shall 
be collected pursuant to law, except as herein otherwise provided.” 

This provision was apparently considered sufficient authority to cover all 
of these taxes as collected into the general fund. District of Columbia. 

B. Although the report of Haskins & Sells has given in considerable detail 
the workings of the sinking fund office, and the items included in the old 
funded debt, and the amount of 3.65 iier cent bonds issued and retired, I am 
unable to express an opinion at this time whether or not the District should 
now be charged with payments made by the sinking fund commissioner on 
account of interest, or for retiring bond issues other than the 3.65 bonds. The 
organic act, June 11, 1878, made no provision for such payments, but subse¬ 
quent legislation may have appeared to authorize them. It is also doubtful 
whether legal authority existed for-the payment of premiums on bonds retired, 
yet it is not seen how the District could now be charged with the excess cost 
to the United States of retiring these bond.s, as the representative of the Fed¬ 
eral Government assumed full authority for incurring the additional expense. 

C. Old balances on Treasury Department ledgers: These are open accounts 
appearing on auxiliary ledger No. 3, and have been made the subject of careful 
study by this office. A full report as to each item is contained in a memo¬ 
randum* prepared by E. Donald Preston, investigator, dated January 15, 1923. 
It is recommended that these items be not considered for the purpose of either 
debiting or crediting the general fund. District of Columbia. 

9 


32894—S. Doc. 301, 67-4 


121 



122 FISCAL KELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 

D. On page 3G, Messrs. Haskins & Sell list 13 classes of miscellaneous 
collections covered wholly to the credit of the District during the period from 
July 1, 1911, to June 30, 1922, totaling $6,300,058.57. 

Motor vehicle tags after, July 1, 1922, have been covered 40 per cent to the 
United States and 60 per cent to the District, but prior to July 1, 1922, there 
was no requirement in law for the District to credit the United States with any 
part of the sums so collected. 

Special reimbursable taxes represent amounts collected on account of work 
performed for private individuals. While the law stated these should be col¬ 
lected in the same manner as general taxes in the District are collected, there 
was apparently no law to prevent reimbursement to the United States of the 
amounts actually charged to United States revenues on account of performing 
this work, nor for a proper share of the penalties and interest accruing there¬ 
upon. Approximately one-half of the amount collected as special reimburs¬ 
able taxes properly belong to the United States, and I would recommend that 
the District be now charged with 50 per cent of such collections on account 
of work performed prior to July 1, 1920, and 40 per cent of such collections 
on account of work performed since July 1, 1920, together with a like pro¬ 
portion of the penalties and interest collected. 

Collections on account of the other items listed, from July 1, 1922, will be 
distributed between the United States and the District in accordance with the 
act of June 29, 1922. Collections made prior to July 1, 1922, were credited 
wholly to the District in accordance with existing law, and I see no reason 
why the District should now be charged with any part of these collections. 

With regard to fees and emoluments collected by the clerk of the Supreme 
Court, District of Columbia, and United States marshal for the District of 
Columbia: Notwithstanding the fact that the expenses of the courts are borne 
60 per cent by the District and 40 per cent by the United States, the earnings 
of the Supreme Court, District of Columbia, through its clerk and United States 
marshal, etc., are covered wholly to the credit of United States. I would 
recommend that from and after July 1, 1922, the earnings of all courts. Dis¬ 
trict of Columbia, be divided between the United States and District of Colum¬ 
bia in the proportion in which the exi)enses of said court are paid out of 
United States and District of Columbia revenues, and that all tines, forfeited 
collateral, marshals’ fees, fees and emoluments of clerks, etc., be considered as 
•earnings of the court. 

E. Certain disbursements not included in the expenses of the District: 
Salaries of Engineer Commissioner, District of Columbia, district engineer in 
charge of the Washington Aqueduct, officer in charge of public buildings and 
grounds, and occasionally other officers in charge of bridge construction, etc., 
are paid out of War Department appropriations. It has apparently not been 
the policy of Congress to charge for the services of engineer officers for river 
and harbor improvements, even where the whole cost of a work is paid by 
States, municipalities, or even by private interests. I can therefore make no 
recommendation as to whether or not these salaries should be charged to Dis¬ 
trict appropriations. 

The same is true so far as charging to the District the cost of bookkeeping 
and auditing in the General Accounting Office and Treasury Department is 
concerned. 

Other items of a like nature would be the service of the Budget Bureau in 
revising District of Columbia estimates and of Congress itself in considering 
legislation affecting the District of Columbia. 

As a partial offset against these apparent benefits, it may be noted that the 
United States derives some benefit by having all District of Columbia money 
deposited in the Treasury without payment of interest, and that the entire 
cost of maintenance of the water system (except for original construction) is 
borne by taxpayers of the District, even though a large portion of the water 
is consumed by the Federal Government establishments. 

P. Purchase of construction materials: This is a revolving fund of $50,000 
appropriated by act of March 2, 1911 (36 Stat. 975), one-half out of United 
States revenues and one-half out of District revenues. Since this fund is 
limited by law to $50,000 (including cash and value of material on hand), it 
is quite clear the District has exceeded the authority of Congress in increas¬ 
ing the value of the fund to $283,087.11. It is suggested that unless Congress 
wishes to approve the action of the District, the fund should be reduced to 
$50,000 by covering into miscellaneous receipts the value of materials trans¬ 
ferred to the various construction projects, one-half to the credit of the United 
States and one-half to the credit of the District. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 123 


G. Drawback certilicates: Tliese certificates represent refundments on ac¬ 
count of erroneous or overcollection of special improvements assessments. 
Wluui applied to the payment of general taxes they also represent a loss to 
the District in general revenue of $702,825.81. Congress, in providing that 50 
per cent of all such drawbacks received in payment of general taxes should 
be considered as money and credited to the District evidently intended to share 
with the District its loss of revenue. Since the United States, by the organic 
act of June 11, 1878, assumed a portion of the general expenses of the District, 
and by legislative acts since that time the United States and District have 
borne a part of the cost of such special improvements as paving, sewers, etc., 
it does not api>ear that the sharing of this loss was intended as a pure gift 
on the part of the United State, but rather a belated recognition on the part 
of the United States of an obligation for a portion of the cost of such special 
improvements. From this viewpoint, I see no reason why the District should 
now be charged with any part of the $351,412.90 credited on account of draw¬ 
back certificates. 

H. Trash reduction plant: The earnings of the trash reduction plant while 
under municipal operation have not been checked by me. However, $30,000 
was transferred from the miscellaneous trust fund deposits account on August 
30, 1922, and paid to the collector of taxes. District of Columbia (audit No. 
32258). This amount was deposited 60 per cent to the credit of the District 
of Columbia and 40 per cent to the credit of the United States. It is presumed 
that this $30,0(X) represented a surplus after operating expenses had l)een paid, 
as it is noted that, while the collector of taxes for the fiscal year 1921 shows 
no receipts from miscellaneous trash, the Director of the Budget repoits re¬ 
ceipts from the sale of waste paper, tin, bottles, etc., $95,599. It is suggested 
that the District be directed to close out this trust fund account and to pay all 
expenses of operating the trash reduction plant from current appropriations, 
and to cover all such collections into miscellaneous receipts to the credit of the 
United States and the District in the proiwrtion in which appropriations there¬ 
for are made. 

I. Relief of Eldred G. Davis, collector of taxes. District of Columbia : No 
equitable reason is known why the United States should have borne all the 
cost of this item, and it is recommended that one-half of the amount, or 
$317.17 be now charged against the District, with interest from the date of 


the relief act. 

J. Increase of compensation paid by United States where 
sation was charged proportionately to the United States 


regular conqx'ii- 
and District of 


regular compensation. It is 
Messrs. Haskins & Sells, be 


K. 

1921 

been 


Columbia: This was an apparent oversight by the legislative body, as the 
“ bonus ” should logically be charged like the 
recommended that $191,890.35, as determined by 
now charged against the District. 

Land for National Zoological Park, acts of .Tune 5. 1920, and INlarch 4, 

: As other appropriations for land for the National Zoological Park have 
charged proportionally against the revenues of the District, there is ai>- 
parently no reason why an exception should be made in these two cases. I 
would therefore recommend that the District be now charged with GO per 
cent of the actual cost of this land. 

L. With regard to the difference of $5,260.68 between the credit balance due 
the District, as shown by the auditor. District of Columbia, and the General 
Accounting Office, this difference is occasioned in part by reason of the fact 
that the General Accounting Office charged the District of Columb'a with 60 
per cent of the amounts on account of the District for public buildings and 
grounds during the fiscal years 1921 and 1922, whereas the auditor, Distiict 
of Columbia, only charged the District with 60 per cent of the net disburse¬ 
ments for those fiscal years. These differences will automatically adjust 
themselves when the balance in each appropriation is carried to the surplus 
fund at the end of two fiscal y^ears. These items are $2,387.55 and .$3,249.60, 

The item of $400, error discovered in the statement for fiscal year 1922. 
occasioned by reason of the reappropriation of $4,000 for a imw lodge 
comfort station in the Smithsonian Grounds. The original appropiaation 
50_50 whei-eas the amount reappropriated was erroneously charged against 
District as 60-40. The District should be credited with ,$400. 

A net charge of $17.89 was made against the District by reason of an eiTor 
in cover'ng ,$29.82 into the water fund. District of Columbia, instead of repay¬ 
ing the appropriation, electrical department. District of Columbia. 1920. 


was 

and 

was 

the 


124 FISC.IL FEL-\TIOXS BETWEEN U. S. AND DISTRICT OF C0LU:MBIA. 


It is also noted that the auditor. District of Coluiiil)ia. has not included in 
his statement a sui'piiis fund warrant the r)istrict of Columbia share of wlncli 
amounts to $1,480.75. This leaves a net uiilocated difference between the United 
States and District of Columbia of $680.39. 

Note. —Ke item B: I have not here referred to siidcing-fund matters for 
the reason that it is understood the.v invohe leaal interpretations which are 
proper for consideration b.v otliers and not strictly a matter within the under¬ 
stood intent of your request for recommendatio!i as to charges or credits. 

Note. —Be item D: The recommendation relative to earnings of courts is 
on the assumption that the expenses of the courts as to Federal matters or 
District of Columl)ia matters ai'e now shared on a proper basis, although it is 
understood that in all of the States the whole burden of maintenance of the 
courts is borne by the United States. 

In conclusion I wish to state that the oi»inions herein expressed are personal 
to the undersigned and are not intended to reflect the official views of the 
General Accounting office or the C'omptroller General. 

Bespectfully. 


Eael Taggart, 


General Accounting Office, 

January 15, 1923. 

In reply to your memorandum of January 11, directing me to report on cer¬ 
tain open balances pertaining to old District of Columbia accounts appearing 
on auxiliary ledger No. 3, I submit the following report: 

1. Debit amount of $2.50,0(X), appearing on the books as due the United States 
from the District of Columbia. This amount represent advances by accountable 
warrants, under an appropriation made by the sundry civil act of INIarch 3, 
1877 (19 Stat. 347), as follows: 

“For the geiiei’al purposes of the District of Columbia, to be expended by the 
commissioners of the said District, two himdreil and fifty thousand dollars.” 

As the appropriation was made prior to the District of Columbia organic 
act of June 11, 1878 (20 Stat. 102-108), no accounting was required of the 
Commissioners, District of Columbia, for this appropriation, and the sum should 
have been advanced b.y a pay warrant rather than an accountable warrant, In 
which event the item would never have api)eared on the personal ledgers. 
The account may now be closed by a .iournal entry voucher, issued by the Di¬ 
vision of Bookkeeping and Warrants, debiting “Balance. July 1, 1907” for 
$250,000, with personal credit to the Commissioners of the District under the 
appropriation named, and crediting “ Accountable warrants ” for the same 
amount. 

2. A credit balance of .$440,353.43, representing a ])alance due the District of 
Columbia as shown l)y certificate No. 222799, dated June 24. 1881. This ac¬ 
count was a purported statement of fiscal relations for the fiscal year ending 
June 30, 1880, In subsequent years, new accounts were stated on a different 
basis by direction of the comptroller, for the ti.scal years 1879 to 1884. inclusive 
(certificate 252556). and 1885 to 1889. inclusive (certificate 272613), and 
annually thereafter. The amount in question was comprebended by certificate 
252556, but not in such a way as to clear the old account. As open balances on 
personal accounts were not taken into consideration in making up the balance 
of July 1, 1907. when the present s.^'stem was installed, on account of the 
impossibility of making up an accurate statement of such balances, no entries 
affecting the general accounts are necessary to close the account A statement 
of the facts ^^'ould constitute sufficient authority for the entry. 

3. A debit balance of $116,775.68, in the account of G. .T. Lydecker. major, 
Corps of Engineers, for the appropriation “ increasing the water supply of 
Washington, D. C.,” representing certain charges raised against the officei* by 
the comptroller on account of faulty construction work by certain contractors. 
This matter was later adjusted in a suit brought against the United States by the 
contractors, as set forth in the memorandum of the chief of the State and Other 
Departments Division, dated January 4; and the charges against the officer 
should now be removed by a supplemental settlement, issued by the State and 
Other Departments Division in the series now used for stating District of 
Columbia accounts. 

4. Three amounts due the United States from .Tohn T. Mitchell, treasurer 
of the Columbia Hospital for WWmen and T.ying-in Asylum, in amounts and 
under appropriations, as follows: 



FISCAL RELATIOXS BETWEEN V. 


S. AND DISTRICT OF COLUMBIA. 


125 


BiiildinL; two cottages, Columbia Hospital. 18S1, report 234424_$5.00 

(\)lumbia Hospital for Women ami Lying-in Asylum, 1883, report 237740— 4. 31 
Columbia Hospital for AVomen and Lying-in Asylum, 1884. report 245094__ 54. 60 

These appear to be legitimate balances due the United States, as the officer, 
in the last account current rendered on the respective accounts, admits them, 
and there is no record of their having been subsequently expended or de¬ 
posited. The accounts can be closed only by collecting the*amounts due from 
the officer or his heirs, and depositing them, or by action of Congress relieving 
the officer from liability, and supplemental certificate by the State and Other 
Departments Division. 

5. Debit balance of $14.86, under the heading “ Funds arising from sale of 
city lots, 1885.” This fund is a collection fund, and a debit balance of such 
a fund indicates that more money has been paid from it than has come into 
it. an obvious impossibility. This arises from an incorrect statement of the 
account of the officer who collected these funds, N. Michler, of the Engineer 
Corps, who actually overdrew the account, and whose account as stated in 
report 169996 shows a balance due him of $14.86, the amount of the overdraft. 
Had the account been correctly stated, the amount of the overdraft would have 
been disallowed and a charge raised against the officer for this amount, which 
would stand until he repaid the money, or until sufficient funds were appro< 
printed by Congress to remove the charge. The account of the fund would 
then have been balanced, and Michler’s account would have shown a balance 
due the United States of $14.86. The accounts can be corrected by a sup¬ 
plemental certificate issued by the State and Other Departments Divis'on, on 
the account of Michler showing on the debit side two items, the first. “ Ueceipts 
from sale of city lots, $14.86,” and the second charge raised against Michler for 
the same amount on account of lack of available funds: and on the credit side 
the old balance brought forward, as due from the United States, $14.86, and 
a new balance to stand on his account, due to the United States, of the same 
amount. This amount will stand against him until the money is collected 
from him or his heirs, or until action of Congress makes it possible to remove the 
suspension. 

6. A balance due the United States on account of G, J. Lydecker, major, 
Corps of Engineers, Washington Aqueduct, 1883, report No. 242206, of $20.31. 
This amount represents two disallowances by the comptroller, the first for 
814.06, for want of explanation of employment of laborers on Sundays during 
the third and fourth quarters, 1882. as shown in report No. 235488; the other 
lor $6.25, for want of explanation of extra payment of employees during the 
same periods. 

7. A balance due the United States from J. W. Ross, George Truesdell, and 
i\lajor Charles P. Powell, Commissioners of the District of Columbia, on ac¬ 
count of “ Buildings, Fire Department, District of Columbia, 1895,” of $5. 
This balance represents an amount suspended in audit No, 49721, payment to 
AVilliam Forsythe, “ for statement showing under what head of the fee bill of 
the surveyors this charge is made.” 

8. A credit balance on the account of M. Hebner, treasurer of the German 
Orphan Asylum Association. District of Columbia, 1896, of $71.91, This entry 
appears to be correct, and if so will stand until the amount is claimed by the 
(Officer or his heirs. 

9. A debit balance of $1,677.63, due the United States from S. L. Phelps, 
Tliomas B. Bryan, and AY. Dennison, Commissioners of the District of Co¬ 
lumbia, on account of “Support and medical treatment of the infirm poor. 
District of Columbia, act of April 4, 1878.” The account shows advances by 
accountable warrant of $5,000, and deposits back into the Treasury of $3,- 
322.37, leaving the amount due as shown above. As in the case mentioned in 
j‘aragraph 1 of this memorandum, this appropriation was made prior to the 
District of Columbia organic act, and while the commissioners were required 
to deposit any unexpended balance, they were not required to account for 
funds exi)ended. As in the case mentioned, the account may be cleared by 
{1 journal entry voucher debiting “ Balance, July 1, 1907, $1,677.63,” and 
“ Treasury deposits, $3,322.37:” and crediting “ Accountable warrants, $5,000.” 

10. The two items of $75,000 each, mentioned in the last paragrapli of your 
memorandum, have been cleared under authority of the letter of the Comp¬ 
troller General, dated December 14, 1922, addressed to the Secretary of the 
'I’reasur.v. 

Respectfully, 


E. Donald Preston, Investigator. 



s 



I 




s 


LETTERS AND REPORT OF HERMAN J. GALLOWAY, SPECIAL 
ASSISTANT TO THE ATTORNEY GENERAL. 


Department of Justice, 
Washington, JnJy 18, 1922. 

The Chairman and Members of the Joint Sp:lect 

Committee of the Congress of the United States. 

Gentlemen : You have orally requested me, as the attorney assigned by the 
Attorney General of the United States from his regular force to represent the 
United States before your committee, in accordance with the provisions of said 
act, for my opinion upon certain questions concerning your duties, which ques¬ 
tions will be hereinafter stated. 

The part of the act creating your committee and which is material to the 
question here involved is as folloivs: 

“A joint select committee, composed of three Senators to be appointed by the 
President of the Senate, and three Representatives to be appointed by the 
Speaker of the House of Representatives, is created and is authorized and 
directed to inquire into all matters pertaining to the tiscal relations between the 
Distr ct of Columbia and the United States since July 1, 1874, with a view of 
ascertaining and reporting to Congress what sums have been expended by the 
United States and by the District of Columbia, respectively, whether for the 
purpose of maintaining, upbuilding, or beautifying the said District or for the 
purpose of conducting its government or its governmental activities and 
agencies, or for the furnishing of conveniences, comforts, and necessities to 
the people of said District. Neither the cost of construction* nor of maintenance 
of any building erected or owned by the United States for the purpose of trans¬ 
act ng therein the business of the Government of the United States shall be con¬ 
sidered by said committee. And in event any money may be, or at any time has 
been by Congress or otherwise, found due, either legally or morally, from the 
one to the other, on account of loans, advancements, or improvements made, 
upon which interest has not been paid by either to the other, then such sums as 
have been or may be found due from one to the other, shall be considered as 
bearing interest at the rate of 3 per centum per annum from the time when the 
principal should, either legally or morally, have been jiaid, until actualy paid. 
And the committee shall also ascertain and report what surplus, if any, the 
District of Columbia has to its credit on the books of the Treasury of the United 
States which has been acquired by taxation or from licenses. And the said 
committee shall report its tindings relative to all the matters hereby referred to 
it to the Senate and House, respectively, on or before the first Monday in Feb¬ 
ruary, 1923.” 

You have suggested that an examination of fiscal relations of the District 
of Columbia and the United States from June 20, 1874, to June 30, 1911, has 
been previously made under the direction of a joint select committee of the 
Congress appointed under House Resolutions No. 154 and No. 200, Sixty-second 
Congress, first session, and Resolution No. 203, Sixty-third Congress, third 
session, and that the results of such examination have been reported to the 
■Congress of the United States and made the basis of subsequent action by the 
Congress, 

You ask my opinion as to what period of time the investigation and exami¬ 
nation by your committee and by accountants which you expect to employ 
should cover, and whether or not it would be proper under the law for your 
committee and your accountants to use this previous audit or any part thereof 
in making such investigation and examination. 

The act above recited is the source of the power and authority of your 
committee and is even the source of its very existence. By such law your 
committee must be strictly governed. This act is mandatory in that by it your 
committee is “ authorized and directed to inquire into all matters pertaining 
to the fiscal relations between the District of Columbia and the United States 
since July 1, 1874.” So that, without investigating all such fiscal matters 
since July 1, 1874, your committee would not be discharging or performing its 

127 


128 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


full duty under tbe act which creates it. Therefore, it is my opinion that 
iinder this act it is your duty to investigate and report upon the fiscal rela¬ 
tions between the District of Columbia and the United States' for the full 
period of time from July 1, 1874, to the end of the fiscal year just passed. 

However, I am also of the opinion that by such act it is necessarily left to 
the discretion of your committee as to how you will make s'uch investigation, 
.and if in the exercise of that discretion you feel, after a careful investigation, 
that any part or parts or even the whole of this previous audit is entirely 
accurate and correct, it Avould be entirely within your right and in full com¬ 
pliance with the mandate given your committee by the Congress to base your 
report after a full investigation upon the parts of such audit so found to be 
correct and accurate, and upon such further investigation and accounting by 
your committee and through your accountants as your committee may feel 
necessary to present the true status of such fiscal relations. In short, your 
committee should, in its investigation, audit “ this audit ” of 1911, to the 
end that your report may assure the Congress, among other things, that its 
audit of 1911 is correct and accurate in every particular. If you do see fit 
in making your investigation to use this previous audit or any part or parts 
thereof. I am of the opinion that it is incumbent upon your committee, in 
accordance with the law under which you are acting, to consider and decide 
all questions of law which were decided in preparing the parts of such previous 
audit as you may see fit to use, and. in the event that you disagree with the 
conclusions upon which such previous audit were based, that you require your 
accountants to make such adjustments as will make the result in accordance 
with your own conclusions. 

Respectfully yours, 

Herman J. Galloway, 

Special Assistant to the Attorney General 


Department of .Iiistice. 

Washington, D. C., January 18, 1923. 

Hon. Lawrence C. Phipps. 

Chairman of the Joint Select Committee inrestigating the Fiscal Relations 
heiueen the District of Columbia and the United States. 

My Dear Senator : I have your letter of January 11, 1923. inclosing a copy 
of the i-eport of Messrs. Haskins & Sells, auditors employed by your committee 
in the investigation of the fiscal relations between the District of Golumbia and 
the United States, and note your request that you wish my comments not 
later than January 18. I hasten to reply thereto. 

No doubt you realize that the time available for a careful examination 
and analyzation of this report is far too short and the comments made herein 
can be but the result of a preliminary study and examination of such report 
I feel that very probably your committee will experience the same thing in 
your consideration of this report, as under the act creating vour committee 
your work must be ended by report by the first Monday in February, 1923. 

The resolution authorizing this investigation provides that it slnill be made 
ascertaining and reporting to Congress what sums have been 
United States and by the District of Columbia, respectively, 
purpose of maintaining, upbuilding, or beautifying the said 
District, or for the purpose of conducting its government or its governmental 
activities and agencies, or for the furnishing of conveniences, comforts, and 
necessities to the people of said District. Neither the cost of construction nor 
of maintenance of any building erected or owned bv the United States for the 
purpose of transacting therein the business of the Government of the United 
States shall be considered by said committee.” The audit does not purport 
to cover all of the branches of expenditure which are included in the joint 
resolution. To do so would be covering quite a wide field and verv probably 
could not be done in the time allowed. For instance, under the heading of 
beautifying the District might be included the expenditure by the United States 
for the erection of many statues over the city of Washington, including such 
large expenditures as the Lincoln iMemorial. Other instances might be cited 
as to matters not covered by the audit but included in the joint 

I he leport on ])age 31 states that no consideration has been given bv the 
accomitants to the question of interest. The resolution provides in' part 
that. And in e-\ent any money may be, or at any time has been by Congress 


“ with a view of 
expended by the 
whether for the 



FISCAL EELATIOXS BETWEEN U. S. AND DISTBICT OF COLUMBIA. 129 


or otherwise, fcuiid due, either le^^ally or morally, from tlie one to the other, 
on aecoiiiit of loans, advancements, or improvements made, upon which interest 
has not been paid by either to the otlier, then such sums as have been or may 
be found due from one to the other shall he considered as bearing interest at 
tlie rate of 3 per cent per annum from the time when the principal should, either 
legally or morally, have been paid, until actually paid,” 

It occurs to me that this clause is not capable of literal administration for 
several reasons, among which are the following: It seems to contemplate the 
calculation by your committee of interest upon sums which Congress may in 
the future find due. This w'ould require you to do a thing which is physically 
impossible. It also requires a determination of whether anything is either 
legally or morally due from the District to the United States, or vice versa. 
This in itself is a difficult question and it is very probable that to literally 
fulfill such requirement the committee might have to deternnne the daily balance 
in favor of either of these. As the state of the account between the District and 
the United States changes daily and is constantly varying, to determine these 
daily balances would be practically an endless task. If anything is due from 
one to the other the audit does not imrport to show when the same became due. 
It may be contended that if there is any money now in the hands of the Ihiited 
States belonging to the District that such is merely a deposit, perhaps a demand 
deposit, and is not due to the District until payment is requested as authorized 
by law, and therefore legally there is nothing due from the United States to the 
District upon which interest could be calculated until after a proper demand has 
been made by the District for the money in accordance with the methods that the 
District is authorized by law to withdraw such money from the Treasury. An¬ 
other question in this connection is whether any such balance could in any sense 
be considered as a loan or advancement as is enumerated in the act authorizing 
interest. 

On page 32 the report of the auditors refers to the depositing of certain 
drawbacks in the Treasury and to the law authorizing the credit of 50 
per cent of the amount of such drawbacks as cash in the general funds of the 
District of Columbia. From a legal standpoint this matter is settled because 
the law authorized the doing of the very thing which has been done and speci¬ 
fically provided for the considering of such proportion of the.se drawbacks as 
cash. Therefore, the only (luestion arising under the resolution is whether 
it is morally right, and that question I am not called upon to discuss as it is 
my duty in this matter to deal purely with legal questions. 

At page 33 an apparent difference between accounts of various offices, amount¬ 
ing to a small sum, is mentioned. The same situation exists in the audit in a 
number of other instances which the auditors have been unable for various 
reasons to reconcile. I do not feel called upon to express any opinion upon 
these matters as they arise from accounting difficulties, which are not within 
the scope, the purpose, or request for these comments. 

On page 34 several small errors of improper charges are referred to. These 
are all verj^ small in amount and should certainly be corrected without requir¬ 
ing any action or attention by Congress, and I am informed that it is planned 
to do this. 

On page 34 the report of the auditors refers to their opinion that in determin¬ 
ing any balance to the credit of the District, consideration should be given to 
assets of the District outstanding July 1, 18T8, subsequently collected and de¬ 
posited to the credit of the general fund, to collections on account of licenses, 
etc., also deposited to the credit of the general fund, and to disbursements made 
by the United States and included in expenditures of certain departments of 
the Government. Certain items of this nature are mentioned later in the 
report and will be discussed in the order in which they are so mentioned. As to 
any other items, of course it is impossible in the absence of their statement in 
the report to assume their existence, to know their source or their nature, and 
in the absence of such information of course it is impossible to say whether 
legally or morally there is any obligation concerning the same. 

The report on page 35 refers to the fact that prior to the fiscal year 1914 
there was a balance due to the United States and that at the end of that 
year the balance had changed to a credit balance of over $68,000 belonging 
to the District of Columbia, and that under an act approved March 3, 1909, 
interest at the rate of 2 per cent had been charged upon certain advances made 
l>y the United States to the District government, but that when the balance 
changed to a credit to the District no interest was calculated upon such balance 


3 30 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


in favor of the District. I have been unable to find any law authorizing the 
allowance of interest upon anything due by the United States to the District 
of Columbia except the act under which your committee was appointed. The 
act of March 3, 1909, mentioned authorizing 2 per cent interest clearly indi¬ 
cates that it intended to include only advances made by the United States to 
the District not reimbursed to the Treasury of the United States before a 
certain time. Along this same line, even though there was a credit balance in 
favor of the District, there is a question whether or not that meant that any¬ 
thing was due the District until the proper requirements were fulfilled by the 
District as provided by law by which they might withdraw money from the 
Treasury. In other words, the money was there merely as a deposit of the Dis¬ 
trict of Columbia and subject to their withdrawal at proper times in proper 
ways as provided by law. It is hard to see how this sum could in any way be 
considered an advancement by the District to the United States or even a debt 
of the United States to the District upon which any interest should in any 
way be calculated. 

At page 35 the report refers to a reimbursable appropriation which is 
in the nature of a revolving fund provided for the purchase of construc¬ 
tion materials by the District of Columbia and that through the operation 
of this fund and the increased valuation of materials between the time of 
the purchase by this fund and the charging of the other appropriations for 
the same there is now available an inventory of approximately $115,000 in 
excess of the original amount available for this purpose. The increased value 
of the inventory results from a charging of various appropriations for con¬ 
struction, and whether such increased value belongs to the District and the 
United States, jointly or either separately, dei>ends upon the nature of the 
appropriation from which the funds came, which is not shown in this audit. 
To accomplish the allocation of this value to the particular funds or appro¬ 
priations from which this money was accumulated would require a great 
amount of work, and as there is no doubt that the property is ih the public 
custody and is helpful for the purpo.ses of carrying on the District, it is 
doubted whether the effort would be worth the results obtained. 

On page 36 of the report reference is made to various fees and licenses 
which are collected by the District and the proceeds credited wholly to the 
District of Columbia. It is suggested in this report that if such fees had been 
apportioned between the District and the United States the balance in such 
fiscal account at June 30, 1922, would have been considerably different. Prom 
a legal standpoint this is settled, as the law contemplates these fees and 
licenses should be credited wholly to the District of Columbia, precisely as has 
been done. As to whether any portion should, from a moral standpoint, be 
paid to the United States is quite a different question, concerning which there 
is no occasion for me to express an opinion. Congress alone should decide 
that. 

At pages 36 and 37 the report discusses the fact that certain officers of the 
Army have been detailed for the performance of services for the District of 
Columbia and their compensations paid wholly out of revenues of the United 
States and that certain employees of the Treasury Department have done a 
great amount of work upon District of Columbia accounts, their compensation 
for such work being paid by the United States. The report infei-s that this 
should be considered in arriving at any balance in the accounts. From a legal 
standpoint these questions are also settled, as there are specific statutes pro¬ 
viding for the payment of these Army officers and for their assignment to Dis¬ 
trict duties and specific statutes creating the positions of the Treasury Depart¬ 
ment employees who were required to keep these District accounts. Again, it 
may be said that the committee and Congress may feel that a moral question 
exists, upon which question I should express no opinion. 

At pages 37 and 38 of the report reference is made to the payment from 
funds of the United States of the bonus of certain employees whose salaries 
are paid jointly by the District and Federal Governnient.s. Up until the act 
approved June 29, 1922, making appropriations for the government of the Dis¬ 
trict of Columbia, there was no law authorizing the payment from District ap¬ 
propriations of any such increased compensation. However, tliere was a law 
granting such increased compensation to District employees and the same was 
paid from the funds of the United States. There would seem to be no viola¬ 
tion of law in such payment. The act making appropriations for the fiscal year 
1923 corrected this and provided th.at such increased compensation should be 
paid from District appropriations. Therefore, it seems that from a policv thus 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OE COLUMBIA. 131 


expressed by Congress there is perhaps a strong equitable case to contend that 
the I^istrict should bear its proportion of such increased compensation of the 
employees whose salaries were paid from joint appropriations but whose bonus 
was paid wholly by the United States, and to this contention it is my under¬ 
standing that the District of Columbia officials do not strenuously object. 

At the bottom of page 38 the report refers to two recent appropriations wholly 
from funds of the United States for purchase of additional land to the National 
Zoological Park and that in previous purchases for this purpose the District of 
Columbia has contributed their proportion. This question, too, is legally 
settled, as Congress, with full power to act, lias so acted and the only question 
remains as to whether you should from a moral standpoint require the District 
to contribute for this purpose and of these moral questions Congress is the sole 
judge. 

At pages 39 to 41 of the report an extended discussion is made of certain old 
accounts open on auxiliary ledger No. 3 in the Division of Bookkeeping and 
Warrants and correspondence from the Treasury Department with reference to 
«ame is reproduced. These are apparentlj' open accounts but the re]>ort does 
not state any definite conclusion with respect to them; and, in fact, the 
report, as well as the correspondence reproduced in it, indicate that they 
actually represent nothing due either to the United States or the District of 
Columbia and that they are mere bookkeeping inaccuracies which can be cor¬ 
rected in full, some of which have already been corrected, and that the others 
will be corrected as soon as the same can be done under the usual formalities 
of Covernment requirements. 

At ]iages 41 to 45 the report discusses the funded debt of the District of Co¬ 
lumbia and on page 45 makes reference to the fact that the District has con¬ 
tributed 50 per cent to the payment of the principal and interest of the sinking 
fund provided to care for the payment of such funded debt. It is true that 
various acts of Congress authorizing the issue of these bonds provided among 
other things that: “ This act shall not be considered to make the Government of 
the United States liable for either the principal or interest of said bonds or any 
part thereof.” And let us concede for the purposes of the discussion of this 
proposition that the United States owes no legal obligation to provide for the 
payment of any of the bonded debt of the United States. Congress has, in fact 
by subsequent appropriations, provided for the payment of interest and the 
creation of a sinking fund to care for the payment of the principal of this 
funded indebtedness, and this has been appropriated from the revenues of both 
the District and the United States and in most of the appropriation acts it is 
expressly recited that so much money appropriated, 50 per cent from the 
revenues of the District and 50 per cent from the moneys of the United States 
“ for the payment of interest and sinking fund of the District.” Congress cer¬ 
tainly had a right to do this and even though the provisions of former acts of 
Congress were in conflict with these appropriations the subsequent action of 
Congress must control and as Congress has acted these provisions have con¬ 
trolled and such question is now legally settled, the only remaining question 
being whether morally it was proper. Again I am compelled to say that Con¬ 
gress is the sole judge of these moral questions and I should express no opinion 
thereon. 

At page 44 the report refers to the fact that although various acts prior to 
1878 had authorized the creation of a sinking fund for the payment of funded 
debts of the District, that only $14,943.73 was turned over to the Treasurer of 
the United States as ex-officio Commissioner of the District of Columbia sinking 
fund on June 29,1878. We are unable to say whether this is the full amount that 
should have been so turned over and the report of the audit does not show and 
in the absence of a showing as to what, if any, in addition to that was due I 
can not express an opinion upon such question. 

At page 45 of the report reference is made to the fact that $281,500, 
being part of the proceeds of the sale of certain bonds of the District, was 
used in the reimbursement of the United States for an advance of a like 
amount previously made available for the redemption of certain old funded 
debt. Technically, this may have been legally improper, but the practical 
result has been that Congress has appropriated from both the funds of the 
United States and the District for the payment of the bonds so sold, the proceeds 
of which were used for this purpose the same as it has done with respect to 
all other funded debts of the District in which it is almost certain these old 
funded debts which were so reimbursed would most probably have been included 
Itad they not been paid as they were paid. So that from a practical standpoint 


132 FISCAL EELATIOXS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


it would seem no question of any material consequence exists as to wlietlier the 
United States or the District lost by this action. 

At page 47 reference is made to the premium paid by the Treasurer of the 
United States in the purchase of bonds of the District for the sinking fund, 
which premiums amount to a very substantial sum. This question was pi-e- 
sented to me a short wliile back by the accountants engaged in the prepara¬ 
tion of the report, and at that time I declined to express an opinion, suggesting 
that the facts concerning the same should be set up in the report to your com¬ 
mittee. Since receiving this report, I have discussed this question with my 
superiors in the Department of .Justice, and it is the consensus of opini(ui 
that this department should express no views upon this question until after 
a more thorough and mature consideration than the time available for these 
comments will permit. It is desired to point out to this committee that an 
expression of opinion upon this question might require the Depaj’tment of 
Justice to act and institute litigation carrying out such views. The depart¬ 
ment does not desire to express an opinion in any way binding it in that 
regard until after the most careful considei’ation and mature delil)eratioii. 
Attention is, however, called to the fact that by an act approved IMarch .3. 1903. 
it is provided that “ the Treasurer of the United States is authorized to invest 
District of Columbia funds in District of Columbia bonds at a price which he 
may deem advantageous.” This and other statutes would .seem to give a wide 
discretion to the Treasurer of the United States in such investment, and 
whether or not he has exceeded his authority and abused his discretion de¬ 
pends upon many facts not now before us. as well as upon conclusions of law. 
Attention is also called to the fact that the report does .show that part of the 
amount in excess of par paid for these bonds was accrued interest, the exact 
amount of which is not stated in this report. This further complicates the 
statement of facts and emphasizes the i-easons for the desire of the Department 
of .Justice to not express an opinion upon this question at this time. 

At page 48 reference is made to certain uncollected taxes in the Dis¬ 
trict of Columbia. This is quite interesting, but I Ijelieve that it has 
bearing from a legal standpoint upon the accounts between the District of 
Columbia and the United States, for the reason that the United States, under 
the appropriation acts, only contributes money in proporion to the actual 
money of the District of Columbia paid into the Treasury of the ITiited States 
and not in proportion to the assessments or taxes levied, whether collected or 
uncollected. 

Reference is made at page 49 of the report to the fact that over 
of uncollected taxes at June 30, 1878, were collected and deposited to the credit 
of the District in the general fund. Elsewhere in the I'eport it is suggested 
that the consideration of this might materially change the balance as it now 
stands on the books. The organic act of June 11. 1878. provides that the 
Commissioners of the District shall have power to apply the taxes and other 
revenues of the District to the payment of the expenses thereof, and that they 
shall take over the books, papers, records, money, credit, securities, assets, and 
accounts belonging or appertaining to the business or interests of the District, 
and another part of the same act provides that all taxes shall be paid in 
the Treasury of the United States, and the same, as well as the appropriations 
to be made by Congress, shall be disposed for the expenses of said District on 
itemized vouchers, etc. In other words, it seems that there was an intention 
to change the form of government, giving to the new form whatever assets 
that had accrued, or were in the process of accruing, for the purpose of be¬ 
ginning and carrying on the new plan. Even actual money then on deposit 
was transferred, to be used in accordance with the new plan, and it certainly 
was not the intention of Congress to deprive the District of all means during 
the first year of carrying out its duties under this new plan, and. had these 
taxes uncollected at June 30, 1878, been used for other purposes than the inir- 
poses of the new form of government, the District would have been unable to 
contribute one cent toward cari-ying out its part of said plan until it was able 
to assess and levy a new tax. 

Certainly Congress did not intend that by this legislation, and, in fact, the 
express provisions of the statute above referred to indicate a contrary intent, 
so that it is my opinion that from a legal standpoint this question is also 
settled as Congress clearly showed that it intended that these uncollected taxes 
be deposited in the Treasury to the credit of the District exactly as they were 
deposited. 


PISC'AL RELATIOXS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 133 


At pa.ues 49 to 02 the report discusses the oliice of the register of wills. With 
most of the discussion we are not concerned as they present no legal questions. 
However, on i)age 50 discussion is made of the fact that the register of 
wills l)y law retains from the fees and emoluments of his oflice his personal 
compensation and the other expenses of his oflice and that the law provides 
that the surplus of such ft^es and emoluments shall be paid into the Treasury 
of the United States to the credit of the District of Columbia, and that there 
are large uncollected balances which are not considered in the calculation of 
these surplus fees. It is my opinion that the uncollected fees should not be 
considered in the surplus fees and emoluments of this office but only the fees 
which are actually collected and paid into the office of the register of wills should 
l)e so considered. A question may arise as to whether the register of wills has 
exercised sufficient diligence in the collection of these fees, but that goes to 
the question of the full performance of his duty, with which we are not con¬ 
cerned. Certainly the District of Columbia is not responsible for any failure 
on the part of the register of wills, and I do not see how either the District or 
the Ignited States profited by such failure to collect these fees. Therefore, 
1 do not see how this in any way should affect the fiscal relations between them. 
Another question is presented as to whether or not advance payments or de- 
]»osits upon work to be done in the future should be considered in the fee.s 
and emoluments of a given fiscal year. This is more in the nature of an ac¬ 
counting matter than of a legal matter. However, it may savor somewhat of 
a legal question, and it is my opinion that fees and emoluments as used in this 
statute means fees earned and paid, and advanced deposits would not be 
included within any such definition. 

At i>ages 52 to 54 the report discusses the office of the recorder of deeds. 
Several things are set out in the report with reference to this office, and the 
only thing which seems to call for any comment by this Department is the 
.suggestion that there is included in the statement of certain fees which are 
turned into the Treasury for each fiscal j’-ear substantial amounts of advanced 
deposits for future work which are required under certain regulations of this 
office. I have discussed this same situation with reference to the office of the 
1 ‘egister of wills and in accordance with the conclusion there expressed again 
state that it is my opinion that such advance deposits should not be so included. 

In conclusion I wish to state a thought which occurs to me in connection 
with the balance which the report of the auditors states exists in the. Treasury 
of the United States to the credit of the District of Columbia. So far as I 
am able to ascertain in the brief time allowed for this purpose. I do not see how 
any law has been violated in the creation of such a surplus. However, I do 
feel that the spirit of the entire arrangement for appropriation and expenses 
of the District of Columbia has been violated. It seems that the plan is to 
provide for the levying of sufficient taxes which will produce a sum of money 
which, together with the other revenues of the District, will equal the District’s 
proportion of the expenses of its government; and that the purpose is that the 
tax levy should be fixed at a sum sufficient to produce that amount and no more, 
and that if any surplus does exist it should be such surplus as results from an 
inability to calculate with exactness the tax levy necessary to produce this 
result. ' It is hard to see how any such errors in calculation should have re- 
suited in the accumulation of approximately $5,000,000 in the period of 
time since 1914. However, I do not say that such is impossible. It is my con¬ 
clusion. therefore, that if any surplus does exist it may correctly be said that 
it legally exists but improperly exists. 

Respectfully submitted. 

Herman ,1. Galloway, 
Special Assistant to the Attornep General. 


Department of .Iusttce. 
Washinf/ton. D. €.. Jannari/ 25, 1923. 

Hon. L.\wrence C. Phipps, 

Chairman of the Joint Select Committee 

Inrestigating the Fiscal Relations hetireen the 

District of Columhia and the United States. 


5Iy Dear Senator; You have asked me to give you my opinion as to the duty 
of your committee under the act creating the same, with reference to any 
money which mav be morally due from the District of Columbia to the United 



134 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA*. 


States or from the United States to the District of Columbia. The act creating 
your committee provides among other things that: 

“ And in event any money may be, or at any time has been by Congress or 
otherwise, found due, either legally or morally, from the one to the other, on 
account of loans, advancements, or improvements made, upon which interest 
has not been paid by either to the other, then such sums as have been or may 
be found due from one to the other shall be considered as bearing interest at 
the rate of 3 per centum per annum from the time when the principal should,, 
either legally or morally, have been paid, until actually 
mittee shall also ascertain and report what surplus, if 
Columbia has to its credit on the books of the Treasury of the United States- 
which has been acquired by taxation or from licenses. And the said committee- 
shall report its findings relative to all the matters hereby referred to it to the 
Senate and House, respectively, on or before the first Monday in February,. 
1923.” 


paid. And the com- 
any, the District of 


One construction of this provision might be that your duty as to moral 
indebtedness related only to the calculation of interest; however, as such cal¬ 
culation would involve a conclusion by you that there was a moral indebted¬ 
ness in existence, and as the general purpose of the creation of your committee 
indicates that it was intended to arrive at the true fiscal relations between 
the District of Columbia and the United States, it is my opinion that this- 
clause intends that you should come to a conclusion as to what, if any, money 
was legally due from one to the other and what, if any, money was morally 
due. In addition to these conclusions you should then calculate interest upon 
this indebtedness at the rate prescribed in the act and make a report to Con¬ 
gress embodying such conclusions with your recommendations, if any, for 
further action. 

The determination of any such moral indebtedness would not be controlled 
by any statutory enactments but by the broad equities and justice of the case ■ 
in question. However, it happens that in this investigation practically all 
of the questions upon which it is contended a moral obligation should be- 
]n-edicated, as shown either by the report of your accountants or as suggested 
to your committee from other sources, are matters upon which Congress has- 
by specific legislation provided or plainly pointed out the manner in which 
Ihey intended that the certain expenditures therein provided for should be 
l)aid. This would seem to settle the question from a legal standpoint, even 
though there was prior legislation indicating a contrary intent upon the part 
of Congress because the familiar rule is that the last legislation must control. 
Therefore, the moral questions involved would amount to little else than 
determination by your committee as to whether or not Congress acted wisely 
when it enacted the specific legislation which is in question.. In considering 
this question it is my opinion that you should closely question all suggestions - 
that Congress in enacting certain legislation overlooked any facts or legis¬ 
lation upon the same subject, and that you should not rely upon such suggestions 
until they are conclusively proven to you, but on the contrary, you should 
indulge to a great extent in the presumption that Congress acted wisely with ■ 
all of the facts before it and after giving all of them due consideration and 
weight, and especially that Congress acted with a full knowledge of all prior 
legislation. While, of course, these considerations would not affect the right' 
or wrong of the question in its inception, certainly they should have some bear¬ 
ing upon the equities of the question as it now exists in view of the fact 
that the legislative body has once passed upon such question and that both of 
the parties to the controversy have long continued their activities in their 
reliance upon the settlement as therein provided. 

The application of the above rules would seem to remove from your consid¬ 
eration practically all of the moral questions except those wherein rather - 
flagrant injustices appear to exist and upon such questions as those it is my 
opinion that it is your duty to report to Congress with recommendations. 

Very truly yours, 


Herman J. Galeoway, 
Special Assistant to the Attorney General. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 135 


Department op Justice, 
Washington, D. C., January 31, 1923. 

Hon. Lawrence C. Phipps, 

Chairman Joint Select Co-mmittee Investigating the Fiscal Relations 

between the District of CoUunhia and the United States. 


]\Iy Dear Senator : You h.Tve asked for my opinion as to the duty of your 
committee under the act creating the same, especially under the portion of such 
act which provides as follows: 

“ * * * with a view of ascertaining and reporting to Congress what sums 

have been expended by the United States and by the District of Columbia, 
respectively whether for the purpose of maintaining, upbuilding, or beautifying 
the said District or for the purpose of conducting its government or its govern¬ 
mental activities and agencies, or for the furnishing of conveniences, comforts, 
and necessities to the people of said District.” 

It is my understanding that the extent of the duty of your committee under 
this provision has been given consideration by you for some time but that the 
question has been made very important by the insistence of certain witnesses 
appearing before your committee that this provision “ includes all expenditures 
made by the UiiTed States for maintaining, upbuilding, or beautifying the Dis¬ 
trict since July 1, 1874, whether the same had ever been considered by Congress 
as in any way affecting the fiscal relations between the District of Columbia and 
the United States and that it includes such activities as the erection of the 
Lincoln Memorial, the Congressional Library, and various other large expen¬ 
ditures. 

Under date of January 18, 1923, I submitted to your committee comments 
upon the report of the auditors employed by your committee. I stated therein 
that “ the time available for a careful examination and analyzation of this 
report is far too short and the comments made herein can be but the result of 
a preliminary study and examination of such report.” I also stated in such 
letter, after quoting the provisions of the act creating your committee which I 
have hereinbefore quoted in this letter, that the “ audit does not purport to 
cover all branches of the expenditures which are included in the joint resolu¬ 
tion. To do so would be covering quite a wide field and very probably could not 
be done in the time allowed. For instance, under the heading of ‘ Beautifying 
the District ’ might be included the expenditure by the United States for the 
erection of many statues over the city of Washington, such large expenditures 
as the Lincoln Memorial. Other instances might be cited as to matters not 
covered by the audit but included in the joint resolution.” 

Of course your committee must be the judge of the scope of its duties under 
the act creating it. It is my opinion that a stric^ literal construction of the 
portion of the act above quoted, separated from the other provisions of the act, 
would require your committee to go into all matters involving the expenditure 
of moneys by either the District or the United States, whether such expendi¬ 
tures were made primarily for purposes other than “ maintaining, upbuilding 
or beautifying the said District or for the purpose of conducting its govern¬ 
ment or its governmental activities and agencies or for the furnishing of con¬ 
veniences, comforts, and necessities to the people of said District,” even though 
the effect of maintaining, upbuilding, or beautifying said District were merely 
incidental to the purposes for which such expenditure was made. After 
hearing the discussion concerning the purposes of the act and a discussion con¬ 
cerning the intention of those who framed the legislation, as well as care¬ 
fully considering the effects of the various constructions which have been 
urged and the remainder of the act in which this provision is found, it is my 
conclusion that this provision of the act shculd not be given a strict literal 
interpretation in disregard of the purpose and intention of the act as a whole 
and of other provisions of the act. 

I am fortified in this conclusion by a consideration of the act as a whole, 
the title of which indicates that it is an act dealing with proportional appro¬ 
priations for the government and other activities of the District of Columbia. 
It is an act directed wholly toward the consideration of those things which are 
primarily and solely for the interest of the District of Columbia. All of the 
act preceding the paragraph quoted deals with an arrangement for proportional 
appropriations and for expenses primarily for the support of the District of 
Columbia. The committee is created “ to inquire into all matters pertaining 
to the fiscal relations between the District of Columbia and the United States 
since July L 1874.” All past legislation upon the fiscal relations between 
the District of Columbia and the United States, so far as I have been able 


136 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


to ascertain, involves expenditures primarily for the beneht or for the main¬ 
taining, upbuilding, or beautifying of the District of Columbia and conducting 
its activities, and Congress seems to have had such things always in mind 
when it considered these fiscal relations. There is nothing in any of the acts 
indicating that Congress ever intended that such expenditures, as for the 
Lincoln Memorial or the Congressional Library, were made for the primary 
purpose of beautifying the District of Columbia, and even some of those urging 
a construction, which would include such expenditures, have stated that they 
do not think that the District should bear any proportion thereof. 

Can it be logically contended that Congress was directing this committee to 
do a useless thing? Further, should not this act have such construction as 
would make it reasonable and susceptible of execution? If it is held to include 
all of these expenditures it is conceded by most all that the task would be so 
^ enormous and the exi^ense so great that the same could not be accomplished 
either within the time fixed by Congress or with the amount of money appro¬ 
priated. All of these things sustain the conclusion which I have heretofore 
expressed that this act should not have a strict literal interpretation in dis¬ 
regard of the act as a whole. It is my opinion that this requires your com¬ 
mittee to report to Congress what sums have been expended by tbe United 
States and by the District of Columbia, respectively, whether expended pri¬ 
marily for the purpose of maintaining, upbuilding, or beautifying the said 
District or primarily for the purpose of conducting its government or its gov¬ 
ernmental activities and agencies, or for the furnishing of conveniences, com¬ 
forts and necessities to the people of the District, excluding the cost of con¬ 
struction or of maintaining any building erected or owned by the United States 
for the purpose of transacting therein the business of the Government of the 
United States and that your report need not include expenditures which do 
have the effect of upbuilding or beautifying the District of Columbia but which 
were erected by Congress primarily for another purpose and which incidentally 
did in fact upbuild or beautify said District. 

Respectfully submitted. 

Hermon J. Gollow’ay. 

Si)C(‘iaI Aasisfnnt to the Attorney General 



0 


r 


PRELIMINARY BRIEF ON BEHALF OF THE CITIZENS’ JOINT COMMIT¬ 
TEE OF THE DISTRICT OF COLUMBIA, INCLUDING COMMENT IN¬ 
VITED BY THE JOINT CONGRESSIONAL COMMITTEE, UPON THE 
REPORT OF HASKINS & SELLS, OFFICIAL ACCOUNTANTS OF THE 
CONGRESSIONAL COMMITTEE, JANUARY 18, 1923. 

In the matter of the tiscal relations between the District of Columl)ia and the 
United States since July 1, 1874; the present suri)lus to the credit of the 
District acquired by taxation or from licenses; and the amount of money 
legally or morally due at this time from the United States to the District, 
or from the District to the United States, before the Joint Select Committee, 
pursuant to the act of Congress approved June 29, 1922. 

The citizens’ joint committee on the tiscal relations between the United 
States and the District of Columbia was organized in 1915 to aid in presenting 
the District’s case at hearings before the Joint Select Congressional Committee, 
appointed pursuant to the act of March 3, 1915. This joint select committee 
was to submit to Congress “ a statement of the proper proportion of the ex¬ 
penses of the government of the District of Columbia * * * which shall 

be borne by said District and the United States, respectively, together with 
the reasons upon which their conclusions may l)e based.” 

The citizens’ joint committee was made up of representatives of the board of 
trade, chamber of commerce, Retail ^Merchants’ Association, Federation of 
Citizens’ Associations, Committee of One Hundred, Builders and Manufac¬ 
turers’ Exchange, Bar Association, Columbia Heights Citizens’ Association, 
Northeast Citizens’ Association, and Georgetown Citizens' Association. 

On the death of Mr. H. B. F. Macfarland, chairman of the joint committee, 
in 1921, he was succeeded by Mr. E. F. Colladay, and to the constituent organi¬ 
zations were added the City Club, the District of Columbia Bankers’ Associa¬ 
tion, the Real Estate Board, the Rotary Club, the Kiwanis Club, the Civitan 
Club, the Cosmopolitan Club. 

The citizens’ joint committee appeared and argued in support of financial 
equity for the District at the hearings before the Joint Select Congressional 
Committee in 1915, the House District Committee in December, 1919. and the 
Senate Appropriations Committee in April. 1920. 

By the act of June 29, 1922, Congress enacted a new organic fiscal law for 
the District and answered the question of 1915 by declaring that the proper 
proportion of the expenses of the government of the District which shall be 
borne by the District and the United States, respectively, is 60 per cent to 
be paid by the District and 40 per cent by the United States. 

The same act appointed a joint committee to examine into the amount of the 
District’s accumulated tax surplus, and in effect to state the account between 
the United States and the District of Columbia since 1874. 

FUNCTIONS OF JOINT SELECT COMMITTEE. 

The functions of the joint select committee of Congress, the tribunal to 
which the brief of the citizens’ joint committee is addressed, are set forth in 
Public Act 256, Sixty-seventh Congress, approved June 29, 1922. as follows: 

“ A joint select committee, composed of three Senators, to be appointed by 
the President of the Senate, and three Representatives, to be appointed by the 
Speaker of the House of Representatives, is created and is authorized and 
dircted to inquire into all matters pertaining to the fiscal relations between 
the District of Columbia and the United States since July 1, 1874, with a view 
of ascertaining and reporting to Congress what sums have been expended by 
the United States and by the District of Columbia, respectively, whether for 
the purpose of maintaining, upbuilding, or beautifying the said District, 
or for tlie purpose of conducting its government or its governmental 
activities and agencies, or for the furnishing of conveniences, comforts, 
and necessities to the people of said District. Neither the cost of con¬ 
struction nor of maintenance of any building erected or owned by the 

10 137 


32894—S. Doc. 301. 67-4 



138 PISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA 


United States for the purpose of transacting therein the business of the 
Government of tlie United States shall be considered by said committee. 
And in event any money may be, or at any time has been, by Congress 
or otherwise, found due, eitlier legally or morally, from the one to the 
other, on account of loans, advancements, or improvements made upon which 
interest has not been paid by either to the other, then such sums as have been 
or may be found due from one to the other, shall be considered as bearing 
interest at the rate of 3 per cent per annum from the time when the principal 
should, either legally or morally, have been paid, until actually paid. And 
the committee shall also ascertain and report what surplus, if any, the District 
of Columbia has to its credit on the books of the Treasury of the United States 
which has been acquired by taxation or from licenses. And the said committee 
shall report its findings relative to all matters hereby referred to it to the 
Senate and House, respectively, on or before the first Monday in February, 
1923.” 

Analyses of the law discloses tliat the functions of the joint select committee 
are as follows: 

1. To ascertain and report what surplus, if any, the District of Columbia 
has to its credit on the books of the Treasury of the United States which has 
been acquired by taxation or from licenses. 

2. To ascertain and report what sums have been ex])ended since July 1, 
1874, by the United States and by the District of Columbia, respectively, 
whether for the purpose of maintaining, upbuilding, or beautifying the said 
District, or for the purpose of conducting its government or its governmental 
activities and agencies, or for the furnishing of conveniences, comforts, and 
necessities to the people of said District. (Omitting from consideration the 
cost of construction and maintenance of any building erected or owned by the 
United States for the purpose of transacting therein the business of the 
Government of the United States.) 

3. To find what money may be due, either legally or morally, from the one to 
the other. 

4. Such sums as have been by Congress or otherwise or may be found to 
be due from one to the other, either legally or morally, upon which interest 
has not been paid by either to the other, shall be considered as bearing interest 
at the rate of 3 per cent per annum from the time when the principal should,, 
either legally or morally, have been paid, until actually paid. 

WASHINGTON’S BASIC CONTENTIONS. 

We seek to demonstrate three basic propositions: 

Part I. There is now an accumulated tax surplus, approximately $4,670,457.65,. 
to the credit of the District in the Treasury. 

Part II. There are no offsets in the shape of United States credits, either in 
the period since 1878 or the period between 1874 and 1878, to make a net re¬ 
duction of the amount of the District’s present tax surplus. On the contrary, 
if the account between the District and the United States since 1874 is restated, 
covering both legal and moral indebtednesses from one to the other, the Dis¬ 
trict’s present surplus will be largely increased. 

Part III. The provisions concerning interest in the act of June 29, 1922, if 
applied in a spirit of equity and in accordance with terms of law to moral as 
well as legal indebtednesses, will not reduce the District’s net surplus. 

Part I. District Tax Surplus Is Not a JMyth But a Concrete Fact, Raising 
A Distinct Obligation Not to be Wavi:d Aside. 

proofs of this proposition. 

* 

1. Analysis of the conditions ci-eatlng this surplus demonstrates its concrete 
existence and the definite obligation, legal and equitable, attached to it. 

2. Analysis of the District auditor’s figures of net surpluses or deficits in 
District tax revenue under the organic act of 1878 for the fiscal years 1900 
to 1920, inclusive, makes the same conclusive demonstration. 

3. Congress in 1903 recognized that there could be and would be such things 
as surplus revenues of the District by directing that the advances which it 
was then making to meet District tax deficits should be ” reimbursed to said 
Treasury from time to time out of the surplus revenues of the District of Co¬ 
lumbia.” 

4. After District deficits had been converted into surpluses Congress recog¬ 
nized the existence of such surpluses in the Treasury by applying portions of 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 139 


these surpluses to the payment of alle.ued ancient indebtednesses of the Dis¬ 
trict to the United KStates, by law specitically transferring to the United 
States sums from “ the amount in the Treasury of the United States to the 
credit of the District of Columbia.” 

5. 1 he United States has recognized credit items in its favor accruing from 
deficits in District tax revenue created by the operation of the half-and- 
half law and as reimbursed itself from District revenues with interest for jid- 
vaiices to meet these deficits. It can not, legally' or equitablv, refuse to recog¬ 
nize the corresponding debit items in the shape of surpluses of collected and 
unexpended District taxes. 

6. The United States recognized this equitable principle in dealing with 
surpluses or deficits, in applying for 2 years (tiscal years 1921 and 19221 the 
temporary 60—40 ratio in l)istrict appropriation bills, by candying over sur¬ 
pluses or deficits into the suceeding year. 

7. The legal obligation thus created and thus demonstrated to exist is not 
weakened, but strengtbened by equitable and moral considerations. The United 
States is, beyond the shadow of a doubt, morally as well as legally indebted. 

8. The existence of this District Treasury credit is now recognized and con¬ 
firmed by the Comptroller General of the United States and by the official ac>> 
countants of the congressional joint committee. 

The legal and moral obligation thus demonstrated to exist is equitably 
satisfied only by the application of the surplus in accordance with the half-and- 
half law under which it was accumulated to meet the District’s half of the 
expense of neglected municipal needs of the war time, which neglects i)er- 
mitted its accumulation. Application of surplus under any other ratio is 
inequitable. 


Part II. There Are No Offsets in the Shape of United States Credits 

Either in the Period Since 1878 or the Period Between 1874 and 1878 

TO Make a Net Reduction of the Amount of the District’s Present 

Tax Surplus. 

This conclusion may be justified in either of two ways: 

1. Accountants Mayes and Spalding have stated the account between the 
United States and the District from 1874 to 1911 with the exhaustive fullness 
so far as credits of the United States are concemed; and Congress has passed 
judgment upon these alleged credits, and, rejecting some, has confirmed others, 
wholly or in part, and in all cases has rejected or failed to approve interest 
claims in respect to these alleged debts; and has compelled the District to 
reimburse to the United States the full amounts found to be due in examina¬ 
tion by Congress of these claims of indebtedness. 

The District claims that Accountants Mayes and Spalding, while stating 
fully every possible credit of the United States, neglected or omitted to state 
with the same careful fullness the credits of the Distiict. 

If the conclusions of Congress on the findings of Accountants Mayes and 
Spalding are to be treated as final adjudications, disposing of claims to Dis¬ 
trict credits, and not to be, reopened, they must also be treated as final ad¬ 
judications in their refusal to allow the United States interest upon any of 
these ancient alleged debts. 

Haskins & Sells, the <'ongressional Joint Committee’s accountants, have 
stated the account between the United States and the District from 1911 to 
date, and if the accounts for the period 1874 to 1911, as stated by Accountants 
Mayes & Spalding, are t<> be accepted as conclusive, the finding of Ac¬ 
countants Haskins & Sells of a net balance to-day to the credit of the District 
is a finding that the Ihiited States is indebted legally and morally to the Dis¬ 
trict in this amount as a minimum. 

If intei-est were allowed tlie District on its surpluses of accumulated taxes 
corresponding to the interest which the United States collected from it on 
advances to meet District deficits in seven years between 1900 and 1910, the 
surplus l)alance found due by Haskins & Sells would be correspondingly aug¬ 
mented. 

If the Congressional Joint Committee adojds this method of answering the 
queries propounded by law concerning the statement of accounts since 1874, 
concerning the surplus to the District's credit in the Treasury and concern¬ 
ing the amount legally and morally due from one party to the other after 
allowance is made for equita!)le interest charges, it can report quickly and 
definitely to Congress its conclusion, and Congress, by adopting this report, 
will recognize as available for appropriation the District’s surplus as deter- 


140 FISCAL LELATTOXS BETWEEN U 


AX^D DISTRICT OF COLUMBIA. 


mined by the Comptroller General and the Congressional Joint Committee’s 
official accountants, will wipe the slate clean of all the hitter contentions and 
recriminations over contradictory claims of indebtedness of the past and will 
give the District a fresh start to test fairly its tinancial weal or woe under 
its new organic act of 1922. 

2. If the statement of accounts from 1874 to 1911 by Accountants Mayes 
& Spaulding is disregarded because it does not state fully District credits 
or for any other reason, and if the District’s account for this period is re¬ 
opened and restated fully, taking into account (as the law of 1922 requires) 
equitable and moral, as well as legal indebtedness, the District's suri)lus will 
not sutfer reduction hut will he increased by the discovery of additional Dis¬ 
trict credits, both legal and equitalde. 

Through statistics compiled by the Disti'iet auditor and by the citizens’ 
committee’s accountants we demonstrate that in equity there should he added . 
to the District credits several million dollars. 

We consider tirst the accounts and e(iuities of the period from 1S7S to 
date; second, at the ]»eriod between 1874 and 1878: third, of the iteriod prif)r 
to 1874, so far as it furnishes surviving equities subsequent to that date. 


ACCOUNTS AN!) EQUITIES OF THE PEUIOD FR0:M 1878 TO DATE. 


The law of 1878 contemplated advances by the United Stiites to the District 
of Columh’a, to he reimbursed in the current year. Xo equitable or moral obli¬ 
gation in favor of the United States can arise from faithfully carryir.g out the 
law of 1878 in accordance with its terms. There can he no obligation of the 
District, for example, to pay interest on advances which are contemplated and 
commanded by the law itself. On the other hand there is an equitable or moral 
obligation by the United States to make good by reimbursements (perhaps with 
interest) any violations by itself of its self-imposed obligations under the law 
of 1878, which remained the permanent, substantive tiscal law of the District, 
until it was, in effect, repealed hy the new tiscal law of June 29, 1922. (20 

Comp. Dec. 440, January 3, 1914.) 

There should he a balancing of accounts on the half-and-half basis during 
this period. Any money collected under the organic act to he spent on the 
half-and-half basis and actually spent on any other basis, as with full cost 
from District tax money, should be restored one-half to the District’s credit and 
entered in the Treasury account. 

An equitable restatement of the account between the United States and the 
District takes note of and corrects; 

1. Items which should be stated on the half-and-half basis and which are 
charged full cost against the District, including the cost of street extension 
and, in part, of street improvement outside of boundary street of the original 
city. This inequity involves an unjust limitation of the application of the act 
of 1878 to the bounds of the original Washington and a rescinding of it in cer¬ 
tain iiarticulars so far as all of the Distinct outsi<le of the original city is 1 * 011 - 
cerned. 

2. Items which should lie stated wholly as national expenses, but which are 
actually stated on the half-and-half liasis, or with the unjust imposition of even 
more than half cost upon the District as taxpayers or consumers. A con¬ 
spicuous example of this inequity is the division of the cost of the capital’s 
water supply system, for the collection, filtration, and distribution of Potomac 
water between the United States as part owner and consumer on one side 


and the District as part owner and water consumer as taxpayer and water rent 
payer on the other. 

Comptroller Downey, in his above-cited decision of January 3. 1914 (20 Comp. 
Dec.), says : 

“ The proper projiortion of appropriations having been determined by the 
act of 1878, ‘ as contemplated ’ by the act of 1874, the pledge became a pledge 
to appropriate 50 per cent out of the Treasury of the United States and 50 
per cent out of the revenues of the District. * * * 

“ It must be observed that under this plan, as outlined in section 3 of the 
act of 1878, there is no contemplation that the District’s part of necessary and 
approved expenditures is to be paid out of a purse already sufficiently' filled 
and with some to spare. On the contrary, the provision is that after the esti¬ 
mated expenditures for the next fiscal year have been approved by Congress, 
and to the extent that they have been so approved, ‘the remaining *50 per cent 
of such approved estimates shall be levied and assessed upon the taxable 
property and the privileges in "said District.’ 


FISCAL RELATION'S BETWEEN V. S. AND DISTRICT OF COLUMBIA. 141 


“ The extent to which the levying of taxes on the property and franchises in 
the District was authorized was thus detined and thus limited. This was a 
so-called organic act. It was an act which provided a form of government, 
created the governing body, and detined its powers, and it is elementary that 
the created governing body could have no power except that specitically dele¬ 
gated by its creator or necessarily incident thereto. * * * The organic 

act provided for the levying of taxes for the fiscal year ending June 30, 1879, 
and subsequent years, and fixed a maximum instead of a specific rate, but 
contains no authority to levy any taxes in excess of that necessary to produce 
50 per cent of the approved estimated expenses, the levying of which is to be 
on the taxable property and the privileges in the District. 

“ The sundry civil act of June 20. 1878, * * * provided that the Com¬ 
missioners of the District ‘ shall have power to assess and collect the taxes 
for the fiscal year 1879 upon the basis of their estimates submitted to Con¬ 
gress,’ meaning necessarily in connection with the provisions of the organic 
act itself, to the extent of 50 per cent of those estimates, and no other power 
to levy taxes was conferred. * * * 

“ Taxes were to be collected during each fiscal year with which to meet the 
District’s part of the expenses for that year. Taxes, of course, could not be 
levied to produce actually and exactly this 50 per cent; the result might be 
a surplus or a deficit. * * * Whether in fact a large surplus or a deficit 

resulted in any one year could have no bearing on the construction of a 
statute which authorized taxation only to the extent of 50 per cent of a speci¬ 
fied amount.” 

Every vital contention of the District concerning the construction of the 
act of 1878 finds powerful support in these words of Comptroller Dowiiey’.s 
decision. 

The only District of Columbia taxation authorized and directed hy law is 
that given to the commissioners to raise one-half of the amount of District 
appropriations previously made by Congress. If the law is followed there 
is no possibility of a surplus of District money, unmatched by United vStates 
dollars. Indeed, the latter are under the law put up first. But in practice 
Congress has repeatedly collected more in District taxes than it has matched, 
either before or after the levy, and has expended this suitIus without dupli¬ 
cation in violation of the law. The account of such expenditures should be 
stated and the amount found in equity to be due the District should be credited 
to it. 

In the relations which existed between Nation and Capital, the Nation all 
powerful, with despotic control of all District assets, and the District impotent, 
voiceless, negligible, any failure of the Nation to meet the self-imposed obli¬ 
gation of the organic act, while that law was permitted to remain unamended 
among the statutes, was a violation of law and equity, raising an equitable 
credit in favor of the District, which it is the avowed purpose of this inquiry 
to ascertain and readjust. 

(The District auditor’s figures show in detail violations of the half-and-half 
principle since 1878, aggregating over $4,000,900, or about $2,000,000 outside 
of the sums involved in repudiation by the Nation of its share of the cost of 
suhurhan street extension.) 

ACCOUNTS AND EQUITIES OF THE PERIOD BETWEEN 1874 AND 187 8. 

1. All District expenditures between 1874 and 1878 (whether met temporarily 
and tentatively by (1) local taxation, or (2) by unconditional appropriations 
from the TreasuiV, or (3) by Treasury appropriations to be treated later as 
part of the proportional contribution of the United States toward capital 
maintenance, or (4) to be reimbursed by the District to the Treasury) are 
to be restated and readjusted on the half-and-half principle. 

When the 50-50 ratio became the law in 1878 it was inserted retroactively 
in the blank to be filled (as it were) in the law of 1874, applying to all 
expenses of the District within this period, including interest on the funded 
debt (21 Comp. Dec. 398-400^01, December, 1914). 

Comptroller Downey’s decision, applying the half-in-half principle to the 
funded delit interest expense between 1874 and 1878 is so worded as by clear 
implication to apply to all District expenses within the same period. 

The 1874 declaration of proportionate contribution by the Nation on a ratio to 
be afterwards fixed and applied to all expenses of the District, including interest 
and sinking-fund payments on the funded debt, and not to the extent only of in¬ 
terest and sinking-fund payments on the funded debt. Comptroller Downey’s vivid 


142 FISCAL EELATIONS BETWEEN V. S. AND DISTRICT OF COLUMBIA. 


description of clmotic conditions in the District’s financial affairs between 1874 
and 1878 covers all expenditures in that period and not merely expenditures in 
connection with the funded debt. The same reasoning which caused the latter 
expense to be readjusteil on the 50 per cent basis, though in respect to the two 
items in question full reimbursement by the District had been directed, compels 
by a clear and direct implication a readjustment on the 50 per cent basis of the 
school and jail expenses of that period, of which full reimbursement was directed 
by the original acts, and which were not long ago fully reimbursed. 

When the accounts of 1874-1878 have been restated and balanced, whatever 
the District has paid more than one-half of the aggregate expenditures should 
be entered as an additional Dislrict credit in the Treasury account. If re¬ 
statement of the account shows that the United States has paid more than one- 
half of the aggregate expenditure, this excess payment should be entered as a 
debit of the District in the Treasury account. 

Our figures show a balance due the District of several million dollars as a re¬ 
sult of this restatement of account. 

2. If, however, there is not to be this general restatement of account for this 
I)eriod and the items are to be considered separately, then such items, for 
example, as those for schools and for completion of the jail, which were rejDaid 
in full by the taxpayers of 1919-20, should be repaid one-half to the District, 
since the principle applied by Comptroller Downey’s decisions to the interest, 
etc., on the funded debt applies equitably and consistently to such other District 
expenses as those of schools and of jail construction. One-half of these items 
should be entered as an additional credit of the District in the Treasury account. 

3. All the exactions from taxpayers of recent years to reimburse the United 
States for alleged indebtedness of the District existing in 1874-1878 should be 
reimbursed in full to the District, and the amount should be entered in full as 
another District credit in the Treasury account. 

The act of 1878 was a settlement in bankruptcy (so to speak) which treated 
District credits and debits as roughly balancing, outside of the specilic pro¬ 
visions of the organic act concerning the funded debt, and wiped the slate 
clean of past debits and credits (21 Comp. Dec. 405 and 406). 

Comptroller Downey, December, 1914 (21 Comp. Dec., p. 405 to 406), says: 
“ But perfect fairness in the treatment of the question submitted requires the 
suggestion that there are plausible grounds for an assumption against the 
present existence of any indebtedness because of the advances made under the 
authority of the two acts in question. * * * There is very reasonable ground 
for assuming that when Congress passed the act of 1878, the organic act, it 
was intended to wipe the slate clean so far as the antecedent period of uncer¬ 
tainty was concerned and take a fresh start. Legislation during the period 
between the acts of 1874 and 1878 had not been after any determined or sys¬ 
tematic plan. The necessities of the District had been met as circumstances 
for the time being seemed to require. The nearest approach to a plan seems to 
be found in an apparent intention to require the application of District revenues 
to District needs, and to furnish from the Federal Treasury whatever additional 
might be required. The organic act took no account of and made no provision 
for the payment of any indebtedness growing out of the transactions of the 
preceding four years between the Government and the District, and that con¬ 
dition was permitted to continue for 35 years. * * * While these conditions 

may in a measure tend to support a contention that the debt, if existent, had 
been released, I do not find in them justification for so holding. * * * There 

are apparent other reasons why the matter should be handled by Congress, 
where power lies to do what the circumstances of the case may seem to require, 
unlimited by the necessity of technical construction jf the fragmentary and 
unsystematic legislation of the period involved. lif there are reasons for as¬ 
suming that the Congress which passed the act of 1878 did not intend to require 
an accounting as to antecedent transactions there is now authority in Con¬ 
gress not found elsewhere so to conclude and act. Then every equitable con¬ 
sideration, as well as the cold facts, may properly be given their full weight 
and a conclusion reached which not only must be deemed authorized because 
with authority, but which can be justified because it is the deliberate con¬ 
clusion of competent men authorized to act, inspired only by right motives 
unhampered by necessity of technical construction and desirous only of ac¬ 
complishing right and justice.” 

The law creating this joint congressional committee specifically broadens the 
scope of the committee’s jurisdiction to consider whether there is indebtedness 
by one fiarty to the other morally as well as legally. So that this tribunal is 
specifically empowered to respond to Comptroller Downey’s suggestion that, un- 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 143 

liampeied by uecGssity for technical construction and. desirous only of accom¬ 
plishing right and justice,” it (representing Congress) should as a court of 
equity examine thoroughly and thoughtfully the District’s contention on this 
point, in respect to which Comptroller Downey says: “ There is very reason¬ 

able ground for assuming that when Congress passed the act of 1875, the or¬ 
ganic act, it was intended to wipe the slate clean so far as the antecedent period 
of uncertainty was concerned and to take a fresh start.” 

The entire amount of the latter-day exactions of ancient alleged debts from 
modern taxpayers should be refunded on the ground that the act of 1878, as 
interpreted by contemporary Congresses and Presidents and by Comptroller 
Downey, was in effect a settlement in bankruptcy of the past debits and credits 
of the District, was treatetl as such by Congress and the Treasury Department 
for many years after 1878, and can not now be treated otherwise except in 
violation of the spirit of the statute of limitations and of equity. 

Since equitable and moral considerations are to enter into this accounting 
by direction of the law itself the taxpayers of to-day should be relieved entire¬ 
ly of any accountability for ancient resurrected alleged debts. 

Such of these debits as have been separated from the general account, thus 
closed, and collected 35 or 40 years later from District taxpayers, should in 
equity be repaid in full. 

Our figures call for a reimbursement of several million dollars to the Dis¬ 
trict under this head. 

EQUITIES SUKVIVING FROM PERIOD BEFORE 1874. 

If the act of 1878 is not to be treated as a settlement, and equities of the 
United States prior to 1878 are to be segregated and satisfied, then the equities 
of the District in this period must also be revived and enforced, including such 
equities as that recognized by the District Commissioners as existing in 1878 
which called for the payment of $16,000,000 by the United States to the Dis¬ 
trict to balance an equitable accounting between the United States and the 
District of Columbia D’om 1791 to date. (Compt. Report, 1878, p. 4.) 

Part III. Interest Equities. 

q’he provisions concerning interest in the act of .Tune 29, 1922, if applied in a 
spirit of equity and in accordance with the terms of the law to moral as well 
as legal indebtedness will not reduce the District’s net surplus. 

This conclusion follows whether the decisions of Congress upon the reports 
of Accountants Mayes and Spalding are or are not viewed as final, conclusive, 
not to be reopened. 

If they are final and conclusive Congress in legislation upon these reports 
of past indebtedness of the District fixed semijudicially and without apyieal 
the amount of reimbursement to be justly made, and determined finally whether 
all or half or none of the alleged indebtedness should be equitably paid, and 
whether or not interest should be charged and paid. The interest provisions 
of the act of June 29, 1922, does not appiy to these reimbursements in respect 
to which Congress in final seinijudicial settlement has determined specifically 
or impliedly that no interest charge should be justly made. 

If these decisions are reopened, and. disregarding the accountings of Ac¬ 
countants Mayes and Spalding except as one-sided statements of United States 
credits, the equities are to be restated from 1874 to the present time, the result 
in respect to interest charges by the United States will be the same. 

Interest can not equitably be collected upon any alleged indebtedness of 
which the principal itself can not equitably be collected as a moral indebtedness. 
We have attempted to demonstrate that the alleged indebtedness of the Dis¬ 
trict to the United States upon which interest claims might plausibly be attached 
are not equitable or moral indebtednesses of the District, but that the United 
States is on the whole morally indebted to the District instead of the District 
being indebted to the United States. Interest follows principal. It results 
that the interest provision of the act of 1922, if equitably applied and enforced, 
will increase the District’s accumulated surplus and not reduce it. 

The conclusion under either alternative is that the United States holds to 
the credit of the District several million dollars of accumulated unappropriated 
tax surpluses. If Congress found it equitable to allow the District interest 
on its surplus of unexpended taxes corresponding to the interest which the 
Nation exacted from the District on advances to meet District deficits in seven 
years between 19(X) and 1910, the District’s treasury surplus, the existence of 
which has been demonstrated, as everyone now apparentiy concedes, would 
be correspondingly increased. 


144 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The citizens committee eanieslly urges the Joint Congressional Com¬ 
mittee to recommend quickly and this Congress to enact promptly for¬ 
mal recognition of the existence as a Treasury credit available for ap¬ 
propriation of the District’s accnmnlated surplus of revenue, stated by 
the Treasury Department, as reported by the official accountants of the 
Congressional Jo.nt Committee, as amounting to $4,676,457.65. We urge 
that action by Congress approving this specific finding of th^ official accountants 
be taken whether or not Congress accepts as final for the period 1874 to 1911, 
at least as far as the United States is concerned, the accountings of Mayes 
and Spalding, as approved or rejected by past Congresses. Though final closing 
of the accounts stating the past fiscal relations of the United States and the 
District of Columbia, and the wiping out on both sides of claims to equitable 
credits would, we have contended, mean a loss to the District, it may be that 
this sacrifice would wisely be made to secure a settlement of peace as to fiscal 
relations of the past which in conjunction with the fixing for the future, of 
the definite permanent ratio of capital contribution of 60-40 will go far toward 
removing a hurtful irritating strife-breeding issue from the relation of Nation 
and Capital. This result was, it is believed, the wise intent of our new fiscal 
organic act of 1922. 

But if Congress is disposed to keep alive these issues and to postpone to 
another Congress final balancing of these alleged equitable credits, action upon 
the specific finding of an existing concrete District of Columbia suit>1us should 
not be correspondingly delayed or delayed at all. The doing of immediate 
justice by this Congress in respect to the existing surplus will endanger no 
interest of the United States. Congress is now and will continue to be in com¬ 
plete and exclusive control of all the District’s revenues and assets and can 
make equitable readjustments of such credits in dispute at any time and at 
its pleasure with no chance of loss to the United States if by any possibility the 
District should hereafter be found to be indebted, legally or morally, in any 
amount to the United States. 

COMMENT ox HASKINS & SELLS’ KEPORT. 

In response to the invitation of the Joint Select Committee of Congress to 
comment upon the report of Haskins & Sells, the official accountants of the 
committee, a copy of whose report was courteously transmitted to us. we 
submit as a part of this brief the following report of the chairman of the 
committee on accounting and auditing of the citizens’ joint committee, Mr. ^ 
Alonzo Tweedale, for 11 years auditor of the District, former president of 
the National Association of Comptrollers and Accounting Officials of the United 
States and treasurer and later general comptroller of the United States 
Shipping Board Emergency Fleet Corporation: 

Washington, D. C., January 16, 1923. 

Mr. Theodore W. Noyes. 

('hairman Executive Committee e>f the Citizens' 

Joint Committee on Fiscal Relations. 

iMv Dear Mr. Noyes : I have examined the report of Messrs. Haskins & Sells,, 
which was transmitted by the Hon. Lawrence C. Phipps, chairman of the Joint 
Select Congressional Committee. Examination of the fiscal relations between 
the United States and the government of the District of Columbia covers the 
period of 11 fiscal years ended June 30. 1912 to 1922, inclusive. This report 
has been analyzed in the brief time allotted to your committee, and the follow¬ 
ing comments are made thereon : 

On page 32 of this report the accountants state that the credit balance of 
$7,574,416.90 in the general fund as of June 30. 1922. is in agreement with the 
certificate of the Comptroller General of the United States, No. 12322, dated 
November 25. 1922. This amount is also in agreement with the amount shown 
on the general ledgers of the District of Columbia with the exception of the 
sum of $5,260.67, which latter amount T am advised has been practically ad¬ 
justed since the date of the certificate of the Comptroller General of the ifnited 
States and arose from the confusion caused by the change in the law from the 
50-50 basis to the 60-40 basis. Th’s estalilishes beyond question of a doubt 
that there is in the Treasury in cash the sum of money claimed by the District 
as being on deposit to the credit of the general fund of the District of Columbia. 

The accountants further show on page 33 of said report with certain minor 
unlocated differences that there is in tlie Treasury $7,579,677.58; that this sum 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 145 

IS obligated by iniexpeiided appropriations in the ainoiint of $2,077,610.24, leav¬ 
ing a balance, on June 30, 1922, of $5,502,001.34. If from this surplus revenue 
7 deducted as an obligation of this fund a sum sufficient to take care of a 

dehciency appropriation which was not signed until after the close of the fiscal 
year, and a further sum to provide for the adjustment of certain surplus fund 
warrants, in all. amounting to $825,603.09, which has been considered in one 
fiscal jear for tax-rate purposes and in another year for accounting jiurposes,. 
we would have available as free surplus in the general fund account of the dis¬ 
trict of Columbia $4,070,457.05. 

It therefore appears from said report that the accounting officers of the 
Treasury Department, the accounting officers of the District of Columbia 
and the accountants employed by the Joint Select Congressional Committee 
are in accord and absolute agreement with respect to one thing, namely, that 
theie is in the Treasury of the United States due the District of Columbia the 
sum of $4,076,457.05 of free surplus money. 

It is therefore respectfully submitted : 

TTiat the account between the parties—the District of Columbia and the 
United States having been so certified and found correct, should be accepted 
by the Government of the United States and the government of the District 
of Columbia and the citizens and taxpayers of said District as final and con¬ 
clusive, in accord and satisfaction between said parties to and including said 
date. 

I am of the opinion that this finding should be placed in such form as to 
indicate that it is final and conclusive between all the parties at interest, and 
be drawn with such definiteness of description that it will clearly show its 
finality and completeness of purpose with respect to all accounting* and finan¬ 
cial problems relating to the fiscal relations between the District of Columbia 
and the United States for the period from July 1, 1874, to and including June 
30. 1922. 

In the event that the settlement of June 30, 1922, is not accepted as final 
between the United States and the District of Columbia, then a detailed and 
complete audit should be made for the entire period 1874 to 1922, inclusive. 

It is respectfully submitted that in the event that the account as stated, 
both by the committee accountants and by the Comptroller General of the 
United States and the auditor of the District of Columbia, is not accepted by 
the Congress as final and conclusive, then and in that event it is imperative 
that a detailed audit, or rather reaudit, should be made of all items entering 
into the fiscal relations of the parties from 1874 to 1922, namely, a period of 
nearly 50 years. 

An examination of the report of Messrs. Haskins & Sells discloses the fact 
that said accountants under tlie terms of their employment were required to 
make an examination only for the 11 years—June 30, 1912, to June 30. 1922, 
inclusive—and to call to the attention of the committee any items coming to 
their attention during the period between July 1, 1874, and June 30, 1911. 

The audit made by said accountants is, therefore, only partial and does not 
fully comply with the terms of the act. which requires “ an inquiry into all 
matters pertaining to the fiscal relations between the District of Columbia 
and the United States since July 1, 1874.” 

In a word, the report of the accountants does not cover the full period re¬ 
quired by the act of 1922. 

It appears, however, to be the intention of the committee in order to cover 
the period for the fiscal years 1874 to 1911, inclusive, to accept the report of 
the accountants employed by the special committee investigating the affairs 
of the District of Columbia under House Kesolutions No. 154 and 200 of the 
Sixty-second Congress, and House Resolution No. 203 of the Sixty-third 
Congress (H. R. Doc. 1627). This report stated the balance in the general 
fund of the District of Columbia on July 1, 1911. If this conclusion is 
coi-rect and these accounts with their certified balance is to be accepted as 
conclusive then no consideration should be given to any items contained in the 
report of Haskins & Sells which cover any of the period previous to July 
1. 1911, for by so doing the implication is at least raised that the previous 
reports contained errors, omissions, or inaccuracies of fact. 

The impracticability of making a detailed audit at this time over a period 
of approximately 50 years—1874 to 1922—and the enormous expense that 
would be entailed therefor is apparent to all. 

Tlie majority of tlie subsidiary records are long since destroyed, being of no 
further use, and the individuals who had charge of the accounts and an 



146 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


immediate and accurate knowledge of the “ facts,” having long since passed 
away, it is absolutely impossible to ascertain the true facts upon which to 
predicate such an account, and an account based upon insufficient, incomplete, 
and an inaccurate statement of facts would be most unjust and inequitable 
to all parties. 

Furthermore, there must come some time, either now or in the future, when 
the account between the District of Columbia and the United States will be 
considered as full and finally settled. To open up said account from year to 
year would serve no good purpose whatsoever. 

Bearing in mind, however, the possibility that the settlement suggested in 
the preceding paragraphs may not be favorably considered, there follows here¬ 
with a memorandum with respect to certain items contained in the Haskins 
& Sells report, and also a memorandum of items suggested by the citizens’ 
committee, which have been omitted from the report of Messrs. Haskins & 
Sells, and on which items, in the judgment of the undersigned, the District 
of Columbia is entitled to receive large credits should the detailed audit above 
referred to be made. 

Mewokandum in Re Haskins & Sells’ Report, Dated January 11, 1923. 

1. drawback certificates. 

(P. 32.) 

These certificates were issued by the District of Columbia in refund or 
abatement of general taxes where .special improvement taxes prior to June 
19, 1878, had been found to be excessive or erroneous and such certificates 
were receivable by the District of Columbia in payment of general taxes in 
like manner as moneys would have been received in payment of such taxes. 
The act of Congress of July 9, 188G. provided that bO per cent of all such draw¬ 
back theretofore or thereafter received in payment of general taxes should be 
considered as money and credited to the District and said drawbacks so re¬ 
ceived were, in absolute conformity with the act of Congress, so credited; there 
can, therefore, be no reason either in law or equity for disturbing the disposi¬ 
tion of these moneys. It was a proper settlement. 

2. ASSETS OF THE DISTRICT OF COLUMBIA JULY 1, 1878. 

(P. 34.) 

The accountants state that it is their opinion that consideration should be 
given by the committee to as,sets of the District of Columbia at July 1, 1878, 
which were subsequently collected and deposited to the credit of the general 
fund of the District of Columbia. 

It would seem that the assets of the District of Columbia on the above date 
regardless of when collected were distinctly the property of the District of 
Columbia, and Congress in the organic act of June 11, 1878, .so declared. 

Section 3 of said act provides: 

“ That as soon as the commissioners appointed and detailed as aforesaid 
shall have taken and subscribed the oath or affirmation hereinbefore required, 
all the powers, rights, duties, and privileges lawfully exercised by, and all 
property, estate and effects now vested by law in the commissioners appointed 
under the provisions of the act of Congress approved June 20, 1874, shall be 
transferred and vested in and imposed upon said commissioners * * * ” 

In a word, all properties of the District of Columbia of whatsoever nature 
were vested in commissioners of said District for the sole use and benefit of 
said District. 

The act of June 11, 1878, further establishes the fact that the commissioners 
were to take title not only to the physical assets, cash property, etc., of the 
District of Columbia, but to amounts and accounts due said District, the follow¬ 
ing language being used: 

“And the Commissioners of the District of Columbia * * * 

possession and supervision of all the offices, books, papers, records, moneys, 
credits, securities, assets, and accounts belonging or appertaining to the busi¬ 
ness or interests of the government of the District of Columbia * * 

“ * * * all taxes heretofore lawfully assessed and due or to become due 

shall be collected pursuant to law.” 

It is, therefore, apparent that all taxes and other assets of the District of Co¬ 
lumbia outstanding July 1, 1878, were properly subsequently collected and 
deposited in the Treasury of the United States to the credit of the District of 
Columbia. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 147 

3. PURCHASE OF CONSTRUCTION MATERIAL-APPROPRIATION REIMBURSABLE. 

(P. 35.) 

In the execution of public works, laying of sewers, construction of sidewalks, 
street paving, etc., it is necessary for the District to carry on hand a con¬ 
siderable amount of building and construction material—cement, pipe, brick, 
steel, curbing, etc. In order that the District might have a cash purchase fund 
for the acquisition of this material a reimbursable appropriation was made, 
being charged one-half to the revenues of the United States and one-half to 
the revenues of the District of Columbia. 

As the actual materials are used on the public works, the several appropria¬ 
tions charged therewith are debited and transfer vouchers passed in the Treasury 
Department debiting said appropriations and crediting the account of the 
special reimbursable fund for the purchase of the construction materials. The 
balance remaining to the credit of said fund is then available for the purchase 
of such further material as may be required. 

It will be apparent, therefore, that this is nothing more than a cash oper¬ 
ating fund and any balance remaining to the credit of the same in excess 
of the operative requirements would inure to the credit of the District of 
Columbia and the United States, respectively. 

The matter of prices does not affect either the United States or the District 
of Columbia one way or the other in their fiscal relations; in that neither 
party makes any contribution thereto other than the amount originally appro¬ 
priated therefor. As a matter of practice, the purchasing officer* of the 
District inventories stock on hand at the beginning of each fiscal year at the 
then contract price, in order to secure uniformity in the price of materials 
issued. 

4. TRASH-REDUCTION PLANT. 

(P. 35.) 

Reference is made by the accountants to an item of $20,076,79, being cash 
balance to the credit of the miscellaneous trust fund deposits account “Trash- 
reduction plant,” June 30, 1922, which sum was covered into the Treasury 
to the joint credit of the District of Columbia and the United States on 
August 31, 1922, being included in a balance of $30,000. 

This account should not be treated by the accountants, in that the physical 

deposit was not made until a date subsequent to the time they were audit¬ 
ing, to wit., June 30, 1922, and, therfore, the Treasury could not admit credit 

for moneys it had not received. Deposit having been made in August closes 

the matter, the United States and the District receiving their due share of said 
money. 

5. DISPOSITION OF CERTAIN RECEIPTS, $3,300,058.57. 

(P. 36.) 

The accountants state if the foregoing sum, consisting of receipts from licenses, 
privileges, etc., had been apportioned as were certain other receipts from 
District sources, the balance in the general fund at June 30, 1922, would 
have been considerably less. The details are as follows: 


Motor vehicle tags_$1, 227, 510. 00 

Special reimbursable taxes- 9, 014. 23 

Police court fines_ 1, 536, 958. 73 

Juvenile court fines_ 77, 426. 76 

Dog licenses-- 109,139. 85 

Elevator operators_ 2, 891. 00 

Engineers’ licenses—_ 1, 632. 00 

Insurance licenses and transfers_ 305, 860.18 

IMiscellaneous licenses_ 1, 364,137. 54 

Motor vehicle operators- 263, 578. 50 

Plumbers’ licenses- 318. 00 

Insurance taxes on business within District_ 1, 222, 092. 88 

Market rents, exclusive of Washington Market Co_ 249, 498. 90 


Total_ 6, 300, 058. 5" 

















148 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


What the accountants have in mind, it is believed, is the langiia. 2 :e used 
in the act of 1923, which uses the words “ taxation and “ licenses ” whereas 
general fund of the District is made up not only of taxation and licenses 
but in accordance with the specific language of the act of Congress of .june 
]1, 1878, is made up of moneys received on account of assessments levied ui)on 
the taxable property and privileges in said District. 

With respect to this matter the organic act of June 11, 1878, provides as 
follows: 

“To the extent to which Congress shall approve of such estimates (for 
the expenses of the government of the District of Columbia) Congress shall 
appropriate the amount of 50 per centum thereof. 

“And the remaining 50 per centum of such approved estimates shall be 
levied and assessed upon the taxable property and privileges in said District 
other than the property of the United States and of the District of Columbia." 

The moneys collected on account of the foregoing taxes and privileges, to¬ 
gether with the appropriations to be made by Congress as aforesaid * * 

“ shall he paid into the Treasury of the United States and the same * * 

disbursed for the expenses of said District * * 

It is apparent from the foregoing that the Congress which enacted the act of 
June 11, 1878, intended that the District’s proportion of appropriations was to 
be paid from its own funds, derived not only from “ taxation ” but from all the 
“ privileges ’’ coming under the municipal government as well. 

Using the word “ privilege ’’ in its ordinary accepted sense would indicate 
the moneys received by the municipality for “ fees,’’ for building permits, water 
connections, railing permits, licenses for the operation of automobiles and otlier 
vehicles, and charges for those other services and privileges ordinarily pertain¬ 
ing to municipal government and the activities incident thereto. 

It is a point well settled in municipal law, that where fees, taxes, or otlier 
moneys have been voluntarily paid into the Public Treasury, that no recovery 
can be had by the payer in the courts; relief, if any, must come by legislative 
act. The reason for this is that the Government must know at some time whar 
moneys are its own. By a like parity of reasoning, the principle must apply 
to moneys received by the District. These moneys should not “ long after¬ 
wards ’’ be taken from the District treasury and given to the Federal Govern¬ 
ment. 

It is, therefore, submitted that all moneys collected by the District for taxes, 
privileges or municipal services, in the ordinary exercise of the municipal 
powers granted to it by the Congress are the peculiar property of said District, 
and that when said moneys have been paid into the Treasury of the United 
States they may be only disbursed therefrom in the language of the act of Con¬ 
gress creating said municipal corporation, the District of Columbia, “ for the 
expenses of said District.’’ 

It will readily be seen, therefore, that neither legally nor morally is the 
United States entitled to any portion of any moneys deposited by the Districr 
of Columbia to the credit of its general fund in absolute accordance with the 
several acts of Congress, including the organic act aforesaid. 

6. CERTAIN DISBURSEMENTS NOT INCLUDED IN THE EXPENSES OF THE DISTRICT, 

(P. 36.) 

The accountants called attention to the fact that certain officers of tlie 
United States Army are assigned from time to time in supervision of certain 
interests of the District government and state no consideration has been 
given to the above expenditures nor to the compensation of certain other Army 
officers and employees of the United States rendering service to the District 
and the compensation of clerks and supervisors of the General Accounting 
Office of the United States for services in connection with District matters. 

This notation in order to be properly considered is divided, first, the ex¬ 
penditures on account of the Army pay and allowances of Army officers 
detailed by the President to the District of Columbia, and, second, the com¬ 
pensation of clerks and supervisors of the General Accounting Office of the 
United States. 

With respect to the assignment of Army Officers, attention is invited to the 
fact that certain officers have in times past been assigned from time to time 
to military schools and academies in the various States to supervision of 
national engineering projec'ts, reclamation work, highways, and work on 


I'ISC.VL RELATIOXS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 149 


rivers and harbors within the boundaries of the various States. At no time 
liave the State governments been called upon to reimburse the United States 
rtn account of the salaries of the officers so assigned. 

M ith respect to the compensation of clerks and supervisors of the General 
Accounting Office of the United States for services in connection with District 
niatters. attention is invited again to the organic act of June 11, 1878, where¬ 
in will be found the following provision of law: 

“And the accounts of said commissioners, and tax collectors, and all other 
officers required to account shall be settled by the accounting officers of the 
Treasury Department of the United States.” 

This clearly indicates that the United States has undertaken in exactly 
the same way as the State governments have undertaken for its own protec¬ 
tion the handling of the auditing, the accounting, and the finances of the 
municipal government of the District of Columbia, and in performing this duty 
it is acting for itself and not on account of the government of the District 
of Columbia. If the employees referred to should receive their compensa¬ 
tion from the government of the District of Columbia, they would be District 
onii)l<)yees and would be in the position of passing upon their own accounts 
instead of being the representative of the United States Government checking 
and verifying the accounts of the municipal government of the District pre¬ 
sented to them for settlement in accordance with existing law. 

('ongress has si)ecifically provided in the act approved March 3, 1881, that— 
” * * * the engineer commissioner shall be entitled to receive such com¬ 

pensation, in addition to his Army pay and allowance, as will make his 
compensation equal to $o,000 per annum * * 

Pursuant to the provisions of this law in those cases where the Army 
•officer detailed to serve as engineer commissioner did not receive Army pay 
and allowance in the aggregate of $o,000 per annum, the deficiency has been 
appropriated for. The sum so paid amounts to very little in that the officers 
^assigned to this duty have been of high rank. 

The “ assistants to the engineer commissioner ” being Army officers assigned 
to assist him in the discharge of his duties have been detailed to the District 
in like manner as Army officers are detailed for military service to the several 
State governments. It would, therefore, seem that neither in law nor in 
equity are any moneys due the United States from the District of Columbia 
on this account. 


7. i:Er]Ml?I'KSE:N[ENT OF ELUKED G. 


OAVTS—? 03 4.3 3. 


(P.37.) 

This is a payment in the nature of a relief bill similar to thousands of 
bills of like nature, ])assed by Congress for the use and benefit of ^Ir. Davis 
and with which the District of Columbia government or the taxpayers had 
nothing to do. 

J'he specific act of Congress referred to directed that the Secretary of 
The Treasury should reimburse ^Ir. Davis the amount specified in the act. 

n. AODITIOXAL GEOUXl) FOE NATIONAL ZOOLOGICAL PAEK. 

(P. 38.) 

Appropriation of $80,(KX) and $2,500 charged wholly to the revenues of the 
United States. 

Not only this sum we submit should be charged wholly against the United 
States, but in justice and equity, there should be refunded to the District of 
Columbia the moneys heretofore contributed by it toward the establishment 
of this park. It is distinctly national in character and one over which the 
District has neither supervision nor say in any manner whatsoever. It comes 
under the Smithsonian Institution, a Federal establishment, which institution 
is clothed with the power of regulating and controlling its maintenance and 
enlargement. There is no more reason for requiring the District to contribute 
toward the enlargement, establishment, or maintenance of this institution 
than it is toward the National Museum. They are distinctly Federal in 
character, of historical and educational interest to the Nation as a whole 
and should be maintained and established by the Federal Government. Me 
submit, therefore, that not only should the itents referred to be charged 


150 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA- 

/ 

wildly to the revenues of the United States but the District of Columbia 
should in equity be reimbursed for the moneys heretofore charged against 
it for its establishment and maintenance. 

10. OLD PERSONAL BALANCES CARRIED ON TREASURY DEPARTMENT LEDGERS. 

(P. 39). 

These balances in no wise affect the fiscal relations of the District of Colum¬ 
bia and the United States, having arisen as follows: 

When requisitions are drawn on appropriations in the Treasury Department 
the amounts thereof are charged to the individual disbursing officers in what 
are known as “ personal account.” When the public creditors are paid there 
from, the vouchers of said disbursing officers are transmitted to the Treasury 
and “ personal ” credit given to said disbursing officers in their account there¬ 
for. Any balances remaining in the hands of the disbursing officers are 
“ repaid ” and credit given therefor, thus closing their personal respective ac¬ 
counts. 

It would appear, therefore, that all that is necessary in order to get these- 
accounts off the ledgers of the Treasury is for the accounting officers to pass 
the necessary credits based upon the receipted vouchers and repayments long 
since made by the persons directly accountable therefor. 

As I have above indicated, this does not affect the fiscal relations of the 
United States and the District of Columbia in that all advances made to the 
District of Columbia by the Treasury are taken up and included in the Dis¬ 
trict account at the time made. 

11. DISTRICT OF COLUMBIA BONDS, JUNE 16, 1879—$1,200,000. 

(P. 44). 

The accountants call attention to the bonds issued under the authority of 
Congress by act approved June 10, 1879, redeemable 20 years after date. 

This matter has been presented to and considered by a committee of Con¬ 
gress examining into the affairs of the District of Columbia, and as no action- 
had been taken it was believed the matter had been finally settled. 

In a report submitted to the Washington Board of Trade by Col. George 
Truesdell, chairman of the standing committee on municipal finance, and 
unanimously adopted by the board January 19, 1912, the following statement 
is made in regard to these bonds: 

“ It is said that ‘ it is the unexpected that always happens.’ Congress gave 
a very forceful illustration of the truth of this old adage in the act of June 
10, 1879, authorizing the. issue of $1,200,000 G per cent 20-year bonds to redeem 
funded indebtedness of the District or of the late corporations of Washington 
and Georgetown due January 1 and March 1, 1879, and certain pleasure bonds, 
with the following proviso: 

“ Provided, That this act shall not be construed to make the Government of 
the United States liable for either the principle or interest of said bonds, or 
any part thereof.’ 

“ Under the provision of this act bonds to the amount of $1,089,300 were 
issued to redeem $990,776.67 of pleasure bonds and for reimbursing the United 
States for the amount of $281,500 advanced to redeem the city of Washington 
10-year bonds, and the city of Georgetown steam force-pump bonds. (Second 
Annual Report Treasurer of the United States, on the sinking fund, November 
29, 1879.) 

“ The proviso in this act is inconsistent with the act of June 20, 1878, and 
the act of March 3, 1879, appropriating from the Public Treasury for interest 
and sinking-fund requirements on the old funded debts of Washington and 
Georgetown, as well as on the 3.65 bonds. Otherwise, it is not inconsistent 
with any previous legislation, except the act of 1878, which limited the amount 
to be raised by taxation to 50 per cent of the approved estimates. All of the- 
previous legislation on the debt concerned only the unfunded debt created by 
the board of public works, as the other old debts of the coi-porations of' 
Washington and Georgetown were evidenced by bonds, stocks, etc., requiring 
no action by Congress, prior to the act of June 10, 1879, except as to payment 
of interest. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 151 


The proviso to the act of June 10, 1879, taken by itself beins; later than 
the acts of June 11 and June 20, 1878, and March 3, 1879, Avhicii have been 
cited as showing that the Government of the United States was thereby com¬ 
mitted to the payment of one-half the interest and principal of the old debt,, 
may fairly be considered to indicate a change of policy on the part of Con¬ 
gress toward that old funded debt and as foreshadowing similar action in 
the future as to the interest and principal of that debt. On the face of it, 
it would be difficult to account for this proviso on any other theory. But 
when we consider it in connection with every subsequent legislative act on 
the subject from that day to this we see that it merelv indicates an isolated 
and final contest against the liability of the United States for any part of 
that debt. It never was repealed except by implication, and, stands as a 
monument marking what it is believed will turn out to be the last serious at¬ 
tempt by Congress to release the Government of the United States from its 
just share of the burden of that debt under the act of 1878. The history of 
that proviso is interesting and altogether exceptional. From the day of its 
enactment into law it has never had life enough in it or force enough behind 
it to command the respect of Congress. It was never violated by anybody nor 
construed by anybody because no one ever had an opportunity to violate or con¬ 
strue it. Congress absolutely ignored it by specifically appropriatin.g for the 
interest and sinking fund which included these bonds, and when the principal 
became due. Congress, by act of Alarch 3, 1891, authorized them to be redeemed 
with proceeds of 10-year funding bonds bearing the same indorsement as the 
3.65 bonds; and these 10-year bonds were long ago redeemed under the operation 
of the sinking fund as have all other bonds except the 3.65 bonds.” 

12. INCONSISTENT HANDLING OF REIMBURSEMENT OF ?;2S1,500 TO THE UNITED 

STATES. 

(P. 45.) 

The accountants’ report refers to the inconsistent handling of the reimburse¬ 
ment of $281,500 to the United States. 

If we have the facts covered in this case, all that hapiiened was the Treasurer 
of the United States as ex officio commissioner of the sinking fund of the 
District merely used temporarily $281,500 of United States moneys in connec¬ 
tion with the sinking-fund operation and reimbursed the same subsequently 
from appropriations made by Congress for interest and sinking fund payable 
by the District of Columbia. The fact that said appropriations were payable 
in accordance with law, one-half by each of the parties, does not affect the 
propriety of the settlement. There is no inconsistency in .such settlement. 

13. SURPLUS FEES, RECORDER OF DEEDS AND REGISTER OF WILLS. 

(Pp. 49 to 54.) 

With respect to the surplus fees of the recorder of deeds and the register 
of wills, which are paid solely by property owners or residents of the District 
of Columbia, it is the contention of the citizens of the District of Columbia 
that as these offices are self-supporting, the revenues of each being sufficient 
to pay the annual expenditures, and as Congress is not called upon to make 
contributions on the half-and-half or any other basis, that all surplus fees of 
both of these offices should not only now Init during all the previous period 
have been turned in exclusively to the credit of the District of Columbia. 

14. INTEREST CHARGES. 

(P. 31.) 

The accountants state “ no consideration has been given by us to the com¬ 
putation of interest as provided for by the act of Congress creating your com¬ 
mittee, as we understand that the question of interest will receive the atten¬ 
tion of your committee after considering all facts developed by its inquiry.” 

This statement of the accountants has reference to the following provision 
of the law: 

“ * ill event any money may be, or at any time has been, by 

Congress or otherwise, found due, either legally or morally, from one to the- 


152 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


other, on account of loans, advancements, or improvements made, upon which 
interest has not been paid by either to the other, then such sums as have b^n 
or may be found due from one to the other shall be coii'^iidered as bearing 
interest at the rate of 3 per cent per annum from the time when the i^rincipal 
should either legally or morally have been paid until actually paid,” 

With respect to this legislation, the position taken by the citizens’ joint com¬ 
mittee on fiscal relations i^* that no interest of any kind should be charged on 
any claim against the District of Columbia where the Congi’ess of the United 
States through its appropriate committee or otherwise has determined that 
certain sums of money should be paid by the District to the United States and 
has passed legislation making a full and final settlement of the amount due 
in each particular case. 

In other words, where Congress, which has complete jurisdiction of the 
finances of the government of the District of Columbia, on its own volition 
examines and states an account and finds a certain amount due the United 
States from the District of Columbia and without recourse passes an act( 
taking the money from the treasury of the District of Columbia and places it in 
the Treasury of the United States without interest, that settlement in all 
equity and faii-ness should be considered as a Ihial and complete settlement of 
that "claim, and thereafter no interest charge should be made on account of 
that item. 

This method of settlement in the payment of claims is one that has been 
recognized by the courts of the United States almost unanimously. Where a 
plaintiff secures a judgment in settlement of a claim and fails to include 
therein interest on said judgment he is forev'er bari'ed from again claiming 
interest. 

iNIox’eover, to charge interest on claims that have already been adjudicated 
by Congress when the sole ]-esponsibility for a large iiart of these claims was 
due to the action of the Congress itself would be unjust, inequitable, and un¬ 
conscionable. 

There have been taken from the revenues of the District of Columbia and 
turned over to the United States by specific acts of Congress the sum of 
$3,349,544.98. Among the items making up this sum is the amount reim¬ 
bursed the United States on account of the hospital for the insane from 1879 
to 1912, $1,002,290.35. The greater part of this amount was occasioned by 
the failure of Congress to pass deficiency appropriation acts that were duly 
presented to that body by the municipal authorities of the District of Columbia 
based upon estimates submitted by the authorities of the Government Hospital 
for the Insane. 

It can not be conceived that because of the failure of Congress to authorize 
the payment of moneys from municipal funds that it would now seek to obtain 
interest on the sums that should have at that time been appropriated. 


Memoeandum of Items Suggested by the Citizens’ Committee Omitted from 
THE Report of FIaskins and Sells and on which it is Believed the Dis¬ 
trict OF Columbia is Entitled to Large Credit, 

Bearing in mind the iiossibility that our i-ecommendation of a settlement 
may not be adopted by the Joint Congressional Committee and in order that 
the record may contain some of the various items which the District of 
Columbia considers should be analyzed and on which, in case of a detailed 
examination of the records from 1874 to date, it is believed the District of 
Columbia will receive large additional credits, the following items are sub¬ 
mitted for consideration. 

INTEREST. 


In order to set out the equitable interest allowance on the general account 
of the District of Columbia, the following statement is presented showing 
cash deposits in the Treasury of the United States to the credit of the general 
fund of the District of Columbia on account of taxes and other revenues 
being the surplus balance at the close of each fiscal year, or on the other 
hand being the amount due the United States and representing the deficiency 
ill the revenues for that year. 



T'TSCAL EELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 153 


Balance due. 


• Fiscal year. 

District of 
Columbia 
(surplus). 

The United 
States 
(deficit). 

Fiscal year. 

District of 
Columbia 
(surplus). 

The United 
States 
(deficit). 

1891. 

$112,210.64 


1907 . 


$3,277,866. 28 
3,650, 563. 06 
3,992,515.03 
3,274,278. 98 
2,665,081. 81 
1,779,061.16 
621,521. 71 

1892. 

$.5,088.04 

1908 . 


1893. 

83,767.19 
625,207.74 
429,090.99 
845,335.93 
683,936. 80 
917,581.91 
603,255. 28 
387,577.18 

1909. 


1894. 


1910. 


1895. 


1911. 


1896. 


1912. 


1897. 


1913. 


1898. 


1914. 

$75,875.24 
731,786. 74 
2,664,717.77 
4,056,547. 40 
6,051,313.95 
7,064,465.62 
7,337,851.25 
7,569,871. 39 
7,579,677. 58 

1899. 


1915. 


1900. 


1916 . 


1901. 

220,182. 57 
1,759,242.46 
1,653,517. 51 

1,349,661.69 
2,240,030,14 
2,931,259.49 

1917. 


1902. 


1918. 


1903. 


1919. 


1904. 


1920. 


1905. 


1921. 


1906. 


1922. 







From the foregoing statement it will be observed that from 1891 to 1900, 
inclusive, with the exception of the iiscal year 1892, the District of Columbia 
had a balance of surplus revenue at the close of each fiscal year, and that from 
1914 to 1922 there was also very large surplus revenues of the District of Co¬ 
lumbia. For the period from 1901 to 1913, inclusive, due to the large expendi¬ 
tures for the construction of extraordinary improvements on a cash l)asis, 
which have been duly authorized by Congress, there existed a deficiency in 
the revenues of the District of Columbia, which was met by advances from 
the United States Treasury to the general fund of the District of Columbia, 
and upon which interest was charged in accordance with law at the rate of 
2 per cent per annum. The total amount charged to District revenues .on 
account of this interest item was $585,076.68. 

IVhile the United States Government received this large amount of interest, 
no allowance has been made to the District for the large sums of surplus 
revenues belonging to the District in the Treasury of the United States for 
the period between 1891 and 1900, and 1914 and 1922. 

Should interest be allowed on these balances, which it would appear in all 
equity they are entitled to, the District would receive a credit of between 


$900,000 and $1,000,000. 

Moreover, this statement relates only to the moneys in the general fuml of 
the District of Columbia. It does not embrace the moneys in the hands of the 
Treasury belonging to the District in the trust and special funds which, ac¬ 
cording to the report of the auditor of the District of Columbia, ended June 30. 
1922, amounted to $671,801.94. and also the amount standing to the credit 
of the disbursing officer of the District of Columbia in the hands of the 
Treasurer of the United States, which, according to the report of the auditor 
of the District of Columbia on June 30, 1922, amounted to $l,080,000.9o. 
These sums are representative of the balances that have existed during the 
years which have preceded, and interest should he allowed on all sums in these 
accounts to the credit of the District of Columbia, 

In addition to the foregoing, there are certain large sums of money in the 
hands of the Treasurer of the United States representing the amount of unpaid 
checks, which amount constitutes a large cash balance belonging to the District 
of Columbia, Interest on similar funds in other municipal .iurisdictions is al¬ 
ways allowed by the hanks having municipal funds on deposit. 

The inequity of charging interest against the District is further demonstrated 
when it is borne in mind that for a long period of years the Secretary of the 
Treasury permitted tax moneys to remain on deposit a certain length of time 
with the national banks of this city. So long as the money remained on deposit 
the national hanks were required to pay to the Secretary of,the Treasury interest 
at the rate of 2 per cent upon such balance. Without checking up the amount 
thus paid to the Secretary of the Treasury for the use of this money the 
national banks in the District, we think we are safe in asserting that this 
amounts to several hundred thousand dollars. Although this was derived Irom 
District taxes and was clearly District money, the Federal Government reaped 


11 


32894—S. Doc. 301, 67-4 











































































154 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


a protit therefrom and has ^iven no credit therefor to the District. In equity 
and j?ood conscience the District should be credited with the amount of interest 
so collected! by the Federal Government. 

APPROPRIATIONS CHARGEABLE WHOLLY TO THE REVENUES OF THE DISTRICT OF 

COLUMBIA. 

There has been a list prepared showing the appropriations that have been 
made payable wholly from the revenues of the District of Columbia. This list 
totals $4,108,608.39. It includes appropriations for street extensions and other 
miscellaneous objects. 

It is recommended that all appropriations from the revenues of the District 
of Columbia which have heretofore been made other than that provided in the 
organic act of June 11, 1878, namely, 50 per cent from the revenues of the 
Un ted States and 50 per cent from the revenues of the District of Columbia, 
should be examined, and where a departure from the principles established by 
Congress in the organic act is found to ex.st the District should be credited 
with an amount equal to the appropriation from the revenues of the United 
States. 

The provisions of the organic act to which reference is made follows: 

“To the extent to which Congress shall approve of such estimates (for the 
expenses of the government of the District of Columbia) Congress shall ap¬ 
propriate the amount of 50 per cent thereof. 

“ And the remaining 50 per cent of such approved estimates shall be levied 
and assessed upon the taxable property and privileges in said District other 
than the property of the United States and of the District of Columbia.” 

As illustrative of .the appropriations payable wholly from District revenue, 
attention is invited to the following appropriations: 

PUBLIC PLAYGROUNDS, COMMUNITY CENTERS AND MINIMUM WAGE BOARD EXPENSES. 

Reference to the auditor of the District of Columbia’s annual reports for the 
fiscal years 1911 to 1922, inclusive, will show that the total expenses, including 
salaries, and maintenance of the following ordinary municipal activities have 
been paid wholly from District revenues: 


Public playgrounds_$542, 755 

Community playgrounds_ 35, 000 

Minimum wage board_ 15, 000 


Total_$592, 755 


It is submitted that there is no difference in the service rendered by the 
municipality in providing public playgrounds to keep the child from the 
street and providing him with a playground on the public-school grounds 
with the attendant teachers or instructors. 

It is just as necessary to care for a child’s welfare by providing him or lier safe, 
and adequate play space as at is to provide for his or her education; and being 
services of like kind it would seem that the appropriations provided for said 
purposes should be borne in like proportion, that is, payable jointly by the 
United States and the District of C('luinbia. In fact, the appropriations for 
playgrounds for the fiscal years 1917 and 1918 were made by Congress payable 
jointly. 

By a like parity of reasoning, the operation of the community centers, which 
are recognized municipal or civic activity in all up-to-date cities, and the 
expenses of the Minimum Wage Board, should be payable jointly by the United 
States and the District of Columbia, both items being no more or no less than 
“general expenses of the District of Columbia ” as contemplated by the organic 
act. 

policemen’s and firemen’s reijef funds. 

The sums constituting these funds, while taken wholly from the revenues 
of the District of Columbia, are not included in the list before mentioned 
as appropriations payable from the revenues of the District of Columbia. 

The expense of the police and fire departments, including salaries of police¬ 
men and firemen, are paid as other general expenses of the government of the 
District of Columbia. 







FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 155 


The pensions and relief, paid from the policemen and firemen’s relief fund— 
except ini' the moneys contributed thereto by the policemen and firemen them¬ 
selves of retentions from their current pay—have been paid wholly from the 
revenues of the District of Columbia. 

It is not apparent how tliere can be any difference between the payment of 
a salary to a policeman or fireman during his days of active service—said 
salary being paid with the understanding that when the man Is no longer able 
to perform active <iuty he will be retired or pensioned—and the payment of 
a pension or allowance after retirement. 

Not only is the foregoing logic absolutely true, but the very act of Congress 
making appropriations for these salaries and pensions is an act making appro¬ 
priations for the general expenses of said District. 

I*aymerits made from policemen’s and firemen’s relief funds of the District 
of Columbia: 


Policemen’s relief fund: 

1886-1912_$1, 065, 342. 67 

1913-1916_ 365, 321. 67 

Firemen’s relief fund: 

1886-1912_ 408, 398. 99 

1913-1916_ 181, 469. 75 

Policemen and firemen’s relief fund (combined), 1917-1922_ 1,055,139.77 


Total paid from District revenues_ 3, (K35, 672. 85 


It is submitted that the foregoing payments have been made on account 
of “general expenses” of the District; therefore the United States should 
pay its proportionate part and reimburse the District therefor, 

ADJUSTMENT OF THE FINANCES OF THE GOVERNMENT OF THE DISTRICT OF COLUMBIA 
DURING THE PERIOD FROM JUNE 20, 1874, TO JUNE 11, 1878. 

The act approved June 20, 1874, providing for a temporary form of govern¬ 
ment for the District of Columbia contemplated that the commission authorized 
by said act to recommend a permanent form of government for said District 
should report at least not later than beginning of the next session of Congress. 
If that had occurred and the recommendation was the same as was adopted by 
Congress in the organic act, dated June 11, 1878, all the expenditures for the 
period from July 1, 1874, to June 30, 1878, would have been paid one-half from 
the United States and one-half from the District of Columbia revenues. 

The result of the provisions of the act of June 11, 1878, with respect to the 
bonded indebtedness of the District during this period as finally construed by 
the fiscal officers of the United States Government was to the effect that one- 
half of said bonded indebtedness and interest was payable from the United 
States revenues and one-half from the revenues of the District of Columbia. 

It is therefore suggested if the accounts of the District are to be reopened 
that by a proper statement of the accounts between 1874 and 1878 a large 
credit will be established which will inure to the benefit of the District of 
Columbia. 

DISTRICT REVENUES APPLIED TO WATER FUND. 

It is believed that a credit will be established to the general fund of the 
District of Columbia if an exhaustive examination is made of the moneys con¬ 
tributed to this project from the revenues of the District of Columbia, the 
revenues of the United States, and the payments from water users, provided 
there is also taken into consideration the amount of water used by the Federal 
Government, ihe government of the District of Columbia, and by individuals. 

SUPREME COURT FINES. 

While this matter has been considered by a previous committee of Congress 
it is believed that equitably and morally the District of Columbia should be 
credited with revenues derived from fines. 

POLICE COURT FINES. 

This matter has received the consilderation of previous committees of Con¬ 
gress, and reimbursement has been made from the general revenue fund of 
the District to the United States Government of $211,450.12. This matter 









156 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


has been ably argued by the auditor of the District of Columbia, and it is be¬ 
lieved that a careful consideration of the arguments on behalf of the District 
in this case would result in the reimbursement to the District of Columbia of 
the amount heretofore charged thereto from a legal as well as an equitable 
standpoint. 

KEY BRIDGE. 


The cost of the erection of this bridge was charged to the District and the 
Federal Government partially on a 50-50 basis and partially on a 60-40 basis. 
There is no more reason why this charge should be made against the District 
than it should be against the State of Virginia or the, Federal Government. It 
was generally known and commonly stated that one of the objects of the 
maintenance, of the said bridge was for the purpose of ready access to the 
city for troops stationed at Fort Myer in case of emergency. The State of 
Virginia prollts equally as well in the maintenance of the bridge. Under 
the circumstances we submit that in equity the cost of this construction should 
not be chargeable to the District of Columbia. 

The items preceding have been submitted for consideration only on the 
theory that a detailed examination of the affairs of the government of the 
District of Columbia are to be made from June 30, 1874, to June 30, 1922, and 
that the recommendation that a settlement based upon the findings of the 
accountants, which confirms the certificate of the Comptroller General of the 
Unitd States and the auditor of the District of Columbia, is not adopted. 

I feel that the committee is warranted in recommending earnestly that this 
method of closing the disputes between the United States and District Govern¬ 
ments should be made, not only in view of the great length of time it will 
take to make this detailed examination but also on account of the enormous 
expense connected therewith. 

This review of the report of Messrs. Haskins & Sells and the financial con¬ 
dition of the District of Columbia was made under the greatest of pressure, 
due to the lack of time and the availability of records required to give it a 
proper detailed analysis. 

Thanks of the committee are due to Mr. Sidney Roche and Mr. H. A. Allen, 
who have devoted time without measure in assisting in this work. 

Thanking you and the members of your committee for your kind assistance, 
I remain. 

Very respectfully. 


Aeonzo Tweedale, 

Chairman Committee on Accounting and Auditing- 


CONCLUSION. 


The taxpayers of to-day—that is of the period 1916 to 1926—are weighed down 
with the tax burdens of past, present and future: (1) They are burdened with 
alleged indebtednesses of the remote past, especially tho'se arising from the 
blunders or neglects of agents of the Federal Government between 1874 and 
1878. Many thousand dollars of such alleged indebtedness have been thus 
inequitably collected from them, and they are now menaced (in violation of 
the spirit of the statute of limitations, with the revivification to their injury of 
debts apparently settled or forgiven more than 40 years ago and with demand 
for payment of interest on these alleged ancient debts. (2) They have been 
burdened with the heavy war taxes of this decade, of which they have paid 
their full share, more in 1918-19 than any one of 15 States, more than 
5 States combined. They have met all their obligations in municipal expendi¬ 
ture. They have been taxed municipally so as to raise in addition to what 
they were permitted to spend several million of surplus taxes under the half 
and half law, and now the question is raised whether they shall be permitted 
to spend for their own benefit the surplus whch they have thus accumulated, 
through violation by Congress, their exclusive legislature, of the literal terms 
of the act of 1878. (3) They are not only thus burdened with the resurrected 

alleged indebtedness long ago dead, buried, and decayed, of the remote past, 
and are not only thus held from the use of millions of taxes collected from 
them in the last three years, constituting their tax revenue of the present, but 
they are menaced with imposition of the burdens of the taxpayers of the future 
by the requirement that in addition to current taxes for current maintenance' 
they shall be taxed to raise millions to meet the first half-year expenditure 
of 1927-28 under the new so-called pay-as-you-go policy, recently proclaimed 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 157 

by Congress. This pay-as-yon-go policy obviously exposes itself as really a 
pay-before-you-go policy. 

What have the taxpayers of this decade to do with the indebtednesses of 
1874 to 1878? What have they to do with the future current expenditures and 
indebtednesses of 1927-28? Why have they not equitably everything to do 
with their surplus of collected and unexpended, because unappropriated, taxes 
now lying in the Treasury awaiting appropriation and application for the Dis¬ 
trict’s use and benefit? 

In applying under the terms of the law of 1922 the test of morality or equity 
to alleged indebtedness the taxpayers of to-day—of the period 1916-1926— 
staggering under the heavy burden of the accumulated obligations arising 
from neglected vital municipal needs of the war time, should be absolutely 
relieved from demands of both principal and interest of ancient resurrected 
alleged debts which died and were buried in the last century; they should 
be permitted to use to pay in part their proportion of the costs of meeting the 
accumulated municipal war-time needs the tax-money collected during the 
war time but not then appropriated to meet these very neglected municipal 
needs, and, finally, instead of being compelled to raise from present taxes 
several million dollars to pay in advance the expenses of the first half of 
the fiscal year 1927-28, the benefits to be derived by the taxpayers of the 
future from great permanent improvements about to be undertaken or now 
under way should be recognized and provision made by Government advances 
to be reimbursed with interest for just participation by the future taxpayers 
in meeting the cost of these great permanent improvements, so beneficial to 
them. 

The taxpayers of 1922-23 should not be required to pay from their current 
tax funds every cent of which is needed to meet the cost of to-day’s Capital 
maintenance and upbuilding, half a million or three-quarters of a million 
dollars toward putting the taxpayers of 1927-28 on a pay-as-you-go or cash 
basis. On the contrary the-taxpayers of 1927-28 should pay part of the cost of 
to-day’s water supply, school construction, street and sewer improvements, by 
which the District of 1927-28 will profit even more than the District of 1922-23. 

Theodore W. Noyes, 

E. F. COLLADAY. 

E. C. Brandenburg, 

James T. Lloyd, 

William L. Beale, 

Brief Committee. 








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REPORT OF THOMAS A. HODGSON. 

The early history of the District of Columbia shows that it was divided 
into live political subdivisions, three of which were located in the territory 
ceded by Maryland and known as Georgetown, Washington (Federal city), 
and county^ or levy court. The remaining two were located in that territory 
ceded by Virginia and known as Alexandria and county of Alexandria, These 
political subdivisions had their own separate local jurisdiction and it would 
have been a misdemeanor for im official of one subdivision to divert the reve¬ 
nues thereof to the use of any of the other subdivisions, other than the one 
for which the revenues were collected. Each subdivision was required to 
collect its own revenues to be disbursed for its own particular needs. 

In 1846 that territory containing the subdivision of Alexandria and Alex¬ 
andria County was ceded back to Virginia, but the integrity of the subdivision 
in that territory ceded by INIaryland was retained until the year 1871, when 
the territorial form of government went into effect. The acreage of the three 
political subdivisions from Maryland, above referred to, was as follows: 
Washington City, 6,111; Georgetown, 550; count.v, 37,658.8; making a total 
of 44,319.8 acres. The locating of the Federal city (called Washington City) 
in the territory ceded by Maryland was brought about by reason of two facts; 
One was that there were 19 land owners who owned the 6,111 acres, and 
who in signing the agreement for the location of the Federal city said, “ We, 
the subscribers, in consideration of the great benefit we expect to derive 
from having the Federal city laid off upon our lands, do hereby agree and 
bind ourselves, our heirs, executors, and administrators to convey in trust to 
the President of the United States or commissioners or such person or persons 
as he shall appoint by good and sufficient deed, in fee simple the whole of 
our respective lands which he may think proper to include within the lines 
of the Federal city for the purpose and on the conditions following,” etc. The 
other reason was that President Washington owned 10,CK)0 acres of land adjacent 
to the territory ceded by Virginia, and he did not desire to receive any personal 
benefit by reason of the location of the Federal city; quite a different viewpoint 
from that of the 19 land owners, as is shown in their agreement. 

The Federal city was finally laid out, and that part not taken for Govern¬ 
ment buildings, streets, and reservations was divided into lots, half of which 
reverted to the original proprietors; the remaining half went to the United 
States Government. The lots obtained by the Government were sold from 
time to time and the proceeds used exclusively by the United States Govern¬ 
ment in the erection of its buildings and the making of streets between these 
buildings. The land bought by the Government from the original proprietors 
was paid for at the rate of $125 per acre. The lots disposed of by the Govern¬ 
ment were sold at the rate of $66.66 per lot. It is claimed that by the act of 
February 21, 1871, the political subdivisions heretofore referred to lost their 
political entity by establishing in their stead the government of the District 
of Columbia for municipal purposes. This act appears to me. to be a legisla¬ 
tive monstrosity, for by its terms it proposes to turn over to the Legislative 
Assembly of the District of Columbia the power to legislate upon matters con¬ 
nected with the Government of the United States. Under the Consftution of 
the United States any attempt by the Congress of the United States to delegate 
authority to legislate is prohibited. The government, established under the above 
act existed for only three years, when, by the act of June 20, 1874, provision 
was made for another form of government to succeed the Territorial form, 
and was known as the temporary form of government (commission). This form 
of government existed for four years and was succeeded by what was termed 
the permanent form of government for the District of Columbia. (Act of June 
11,1878.) 

The attention of the committee is now invited to certain matters that oc¬ 
curred during the formative period of the present government and subsequent 
thereto. The act of June 20, 1878 (U. S. Stat. at L., vol. 20, p. 208), authorizes 
the Commissioners of the District of Columbia to issue bonds to the amount of 

159 


160 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


$281,750 for the redemption of the 10-year bonds issued by the corporation of 
\\5is]iiiij>ton prior to the Territorial government, under an act of Congress ap¬ 
proved February 27,1868, amounting to $279,250; also to redeem the Georgetown 
steam force pump bonds, amounting to $2,500, issued under the act of the General 
Assembly of the District of Columbia of June 26, 1873. The act of December 
23, 1878, amending the act of June 20, 1878, in section 2 provides that the 
Secretary of the Treasury be, and he is hereby, authorized to advance to the 
sinking fund commissioner, upon requisitions of the Commissioners of the Dis¬ 
trict of Columbia, a sum not exceeding $281,500 to pay the bonds of said 
District falling due as aforesaid, and the amount so advanced shall be reim¬ 
bursed to the United States from the sale of the bonds to be issued in accord¬ 
ance with the provisions of this act. The act of June 10, 1879 (U. S. Stat. at 
L., p. 9). provides: 

“ That the Commissioners of the District of Columbia be, and they are 
hereby, authorized to prepare, execute, and deposit with the Secretary of the 
Treasury of the United States bonds of the District of Columbia bearing 
interest not exceeding hve pei’ centum per annum, and payal)le twenty years 
after date, to the amount of not more than one million two hundred thousand 
dollars, the proceeds to be used only for the redemption of funded in(lebte<lness 
r>f said District or of the late municipal corporations of Washington and 
Georgetown, which became due January 1st, and March 1st, 1879, or those now 
existing and payable at pleasure, for the redemption of which the sinking fund 
of said District may not provide. Sa’d live per centum bonds shall l)e in such 
form and denomination as the Secretary of the Treasury shall approve and 
shall be numbered consecutively and registered in the office of the auditor of 
said District, and also in the office of the llegister of the Treasury of the 
United States, in such manner as the Secretary of the Treasury may direct, and 
shall bear the seal of the District of Columbia: Provided, That this act shall 
not be construed to make the Government of the United States lial)le for 
either the principal or interest of said bonds or any part thereof. Said bonds 
shall l)e sold by the Secretary of the Treasury to tb.e highest bidder upon public 
tender, but for not less than their par value, after being advertised for one 
week in two daily newspapers in the city of Washington and two in the 
city of New York. The bids shall be opened by the Secretary of the Treasury 
and the awai'ds approved by him. The money realized from the sale of said 
bonds shall be paid out by the Secretary of the Treasury only for the purpose 
named by this act (sec. 2). That the provisions of all acts conflicting here¬ 
with, and the acts or i)arts of acts authorizing said Commissioners of the Dis¬ 
trict of Columb.a to issue bonds to redeem certain bonds of said District 
falling due Jan. 1. and IMar. 1, 1879, no bonds having been issued thereunder, 
are hereby repealed.” (Approved June 10. 1879.) 

As a matter of history the bonds issued under the above act were sold at 
a premium amounting to $8,552.06 and the premium was credited to the general 
fund of the District of Columbia, the United States sharing in no part thereof. 
For the purpose of this statement I will divide the debt of the District of 
Columbia on July 1, 1878, into two parts, one part called the old debt amount¬ 
ing to $8,633,400, the other part, the new debt amounting to $13,473,250, mak¬ 
ing a total debt on that date of $22,106,650. Referring to the act of June 10. 
1879, we see that the intent of Congress was plainly manifest that the United 
States would not be responsible for either the principal, or the interest, or any 
part thereof of the old debt, but this intent was absolutely eliminated by the un¬ 
warranted act of the Treasurer of the United States by including this item in 
the estimates for expenses of the District of Columbia, which when appro¬ 
priated for, came under the enacting clause of the appropriation act which con¬ 
trols the proportion which the United States and the District of Columbia shall 
bear, which in connection with the old debt was 50 per cent by the United 
States and 50 per cent by the District of Columbia, and it has all been paid 
in that proportion. This old debt was fully paid in this way years ago. 

Attention is invited to the similarity of the language used in connection with 
this old debt and the language used in connection with the old debt of Alex¬ 
andria, found in what is called the retrocession act of July 9, 1846, section 6, 
which says: “And be it further enacted, that Congress will in no event assume 
and pay the debt or any part thereof, now due by the corporation of the city of 
Alexandria.” This old debt of Alexandria was concurrent with the old debt of 
Washington. The legislation in connection with these old debts and in many 
other instances respecting the internal affairs of the District of Columbia 
shows that the Congress of the United States has in mind a purpose and inten- 


FISCAL LKLATIONS BETWEEN U. S. AND DISTKICT OF COLUMBIA. 161 


tioii to protect and consider the interest of the people of the United States. 
From statements made before the joint select committee, which had under con¬ 
sideration the subject of Government for the District of Columbia, the founda¬ 
tion of the permanent form of Government as pi'ovided for in the act of June 
11, 1878 (commonly called the organic act) is, in my opinion, economically 
unsound. One of the statements made at that time was that the population of 
the District of Columbia was composed, to a very large extent, of Government 
clerks who were temporarily employed by the Federal Government and did not 
contribute to the revenues of the District of Columbia. It was also stated that 
another part of the population of the District was composed of negroes who had 
come to Washington immediately after the Civil War, and who also did not con¬ 
tribute to the revenues of the District. These contentions were made in order 
to get contributions from the United States to pay toward the running expenses 
of the District government. Neither of the reasons given above will bear a close 
scrutiny, for instance: If a Government clerk owned his home, he paid direct 
the taxes thereon; if he was simply a renter he paid the tax indirectly. The 
same reasons apply equally to the negro settlement. 

Another claim put forth before the committee to procure a contribution of 
50 per cent by the United States toward paying the expenses of the District 
was that the holdings of the United States Government, consisting of buildings, 
streets, reservations, and parks, were e{iual to the holdings of the cit zens of 
the District of Columbia. In this argument it was contended that it was not 
intended at the time that the broad avenues and streets were laid out and 
maintained that this burden should have been put upon the citizens of the 
District, and tliat they should be relieved of it, as they were purely necessities 
of the United States Government. As to the uses of the streets, it was con¬ 
tended by the citizens that not 10 per cent of such use was for the benefit of 
the citizens. These contentions are absolutely absurd, for there is no one ac- 
(piainted with the facts but who knows that there is not an avenue or street 
in the District of Columbia too broad to {iccommodate the business require¬ 
ments of the citizens of the District. This is also true as to parks and reser¬ 
vations. The claim was also made that by reason of equal investments by 
the United States and the citizens of the District of Columbia and the sole 
ownership of the streets by the United States, there should be established 
the 50-50 ratio of expenses for the District. My opinion is that this contention 
is also unsound. In my judgment, the cause for the United States paying 
any part of the expenses of the municipal government of the District was due 
to the deplorable conditions surrounding the local government at the time 
prior to the act of June 11, 1878. With a bankrupt local government, wb.ich 
was unabl as a government to even take care of the suffering poor of the com- 
mumty. as is shown by the statements hereinafter to be referred to, the Ignited 
States Government came to the relief of this unfortunate class of people re¬ 
siding at the National Capital. 

This, in my opinion, was the real cause for establishing the 50-50 per cent 
proportions of expenses rather than equal interest in investments. Another 
reason sometimes put forth by the citizens is that the local government has 
always discouraged the establishing of manufacturing projects in the District 
of Columbia. In order to prove that this contention is not true. I refer to 
the act dated June 26, 1873, chapter 54, passed by the Legislative Assembly 
of the District, entitled “ An act for the encouragement of manufactures in 
the District of Columbia.” This act provided that all property, both real 
and personal, which may hereafter be actually employed within the limits of 
the District of Columbia for manufacturing purposes, shall be exempt from 
all general taxes for a period of 10 years from the date of this act going into 
effect: Provided, That the value of the property so employed for manufac¬ 
turers’ purposes shall not be less than $5 000. (Approved June 26. 1873.) 
Attention is again called to the financial conditions prior to 1878, when the 
securities of the local government were almost worthless; even the bonds 
known as the 3.65, backed by the United States Government as a guarantor, 
sold for 60 cents on the dollar. Coming down to a later period in the history 
of the District government, the following acts appear to indicate that the 
Government of the United States did not intend to bear any part of the 
expenses in developing that part of the territory designated in this statement 
as the county (or levy court) containing 37,658.8 acres. 

The act of March 2, 1893 (27 Stat. L. 536), section 15, provides that the 
amount awarded by said court as damages for each highway or reservation 
or part thereof condemned and established under this act shall be one half 


162 FISCAL RELATIONS BETWEEN T 


AND DISTRICT OF COLUMBIA. 


assessed against the land benetited thereby and the other lialf shall be charged 
up to the revenues of the District of Columbia. That one-half of the amount 
awarded by said court as damages for each highway or reservation or part 
thereof condemned and established under tliis act shall be charged upon the 
lands benetited by the laying out and opening of such highways or reservations 
or part thereof, and the remainder of the said amount shall be charged to 
the revenues of the District of Columbia. The last paragraph in section 15 
provides that no expense for the improvement of any street, circle, reservation, 
or avenue laid out under the provisions of this act outside the cities of Wash¬ 
ington and Georgetown shall be chargeable to the Treasury of the United 
States, but such expenses shall be paid solely out of the revenues of the Dis¬ 
trict of Columbia. The act of March 2, 1893, has been contested in the local 
courts and sustained. The act of June 11, 1896 (29 Stat. L. 397), chapter 
419, under appropriation “ Extension of highways,” provides: “ To pay the 

expenses of completing a plan for the extension of a permanent system of 
highways in conformity with the act to provide a permanent system of high¬ 
ways in that part of the District of Columbia lying outside of the cities.” 

Approved March 2, 1893, $10,609 to be paid wholly out of the revenues of the 

District of Columbia: Provided, That this sum, so much as may be neces¬ 
sary may l)e expended by the Comniis.sioners of the District of Columbia 
for the preparation of plans in part and for reports by Frederick Law Aim- 
stead or other eminent landscape architect. For advertising and court ex¬ 
penses necessary for the execution of the act entitled “ An act to provide a 
permanent system of highways in that part of the District lying outside of 
cities.” Approved March 2, 1893, $10,000 ( 29 Stat. L., 699), under the title 
of appropriation “ Permanent system of highways ” appropriated to pay the 
expenses of completing a plan for the extension of a permanent system of high¬ 
ways in conformity with the acts t<» provide a permanent system of high¬ 
ways in that part of the District of Columbia lying outside of the cities. 

Approved March 2, 1893, $6,000 to be paid wholly out of the revenues of the 
District of Columbia. In addition to the $6,000 there was appropriated for 
advertising and court expenses the sum of $10,000 to be paid wholly out of the 
revenues of the District of Columbia. 

The first act relative to the construction of country roads and suburban streets 
is of March 3, 1887, vol. 14, United States Statutes, 573. “ For construction 

county roads and suburban streets including the completion of the Eastern 
Branch Road, the Bennings Bridge Road; the Tennallytown Road and the 
Bladensburg Road, fifty thousand dollars; no part of the above amount to be 
expended in the laying out of new roads or streets.” 

Again on page 672 of 29 United States Statutes at Large, appropriation was 
made for the straight extension of Connecticut Avenue, as follows: “ The Com¬ 
missioners of the District of Columbia are authorized and directed to extend 
and open Connecticut Avenue on the straight extension of the line thereof as 
now established in the city of Washington from Connecticut Avenue extended 
as now laid out and opened on the west side of Rock Creek to Kalorama Ave¬ 
nue on the east side of Rock Creek, thence by a curved line or offset to join 
with the present adopted and recorded lecation of Connecticut Avenue south of 
Kalorama Avenue and to include in Connecticut Avenue a circular reservation 
at or near Kalorama Avenue in line wthi the straight extension of Connecticut 
Avenue with suitable passageway around such circle and also to include in 
such avenues such portions of the corners of scpiares at the intersections of 
Connecticut Avenue with Kalorama Avenue as the commissioners may find 
necessary for ample and convenient connections of streets, and they are au¬ 
thorized and directed to abandon the deflected lines for Connecticut Avenue 
heretofore adopted north of Kalorama Avenue and to conform to the plan 
of highway extensions to the extension of Connecticut Avenue aforesaid: 
Provided, That conditioned upon the dedication by the owners of the pi’operty 
lying within the lines of said proposed extension between the water side 
drive on the east side of Rock Creek and the present extension of Connecticut 
Avenue on the west side of Rock Creek, the sum of $50,000 is hereby appropri¬ 
ated wholly from the revenues of the District of Columbia, to be immediately 
available for the purchase or condemnation by the Commissioners of the Dis¬ 
trict of Columbia of the property lying within the extension of Connecticut 
Avenue and extending from said water side drive southerly to Florida Avenue.” 

Attention is also invited to the act of June 28, 1898 (30 Stat. L. p. 519), 
chapter 519, wherein certain sections of the act of March 2, 1893, were repealed, 
including section 15, quoted in the foregoing statement as authority for 


FISCAL LELATIOXS BETWEEN U. S. AND DISTPJCT OF COLUMBIA. 163 


cliarging expenses for extension of streets in the District outside of the cities 
wholly to the revenues of the District of Columhia. The repeal of these sec¬ 
tions, including section 15 of the act of INIarch 2, 1893, appears to me to be a 
deliberate intent to defeat the object of the original law. However, subsequent 
acts of Congress reestablished the principle which was repealed by rei)ealing 
section 15. The act of June 9, 1900 (31 Stat. L. p. 559), appropriates to pay 
for the expenses of carrying out the plans for the extension of permanent 
system of highways in conformity with the act to provide a permanent system 
of highways in that part of the District of Columbia lying outside of the 
cities approved March 2. 1893, $2,500, to be paid wholly out of the revenues 
of the District of Columbia. Also the act of March 3, 1901 (31 Stat. L. p. 1021), 
appropriates for the “ extension of streets and avenues.” For amount re¬ 
quired to pay the jury in condemnation proceedings for the widening of Co¬ 
lumbia Road and Sixteenth Street, to be paid wholly out of the revenues of 
the District of Columbia, $725 (deficiency act). Also, attention is called to 
the act of February 11, 1901 (31 Stat. L. p. 766). This act is for the purpose 
of permitting the District of Columbia to have advances from the United 
States in excess of its own revenues in order to make extraordinary expendi¬ 
tures, and upon such excess the District was to pay 2 per cent interest. I 
quote a paragraph in this law, which says: 

Provided, That nothing contained herein nor in the act of .Tune 6, 1900, 
entitled ‘An act to regulate the collection of taxes in the District of Colum¬ 
bia,’ shall be so construed as to require the United States to bear any part 
of the cost of street extensions, and all advances heretofore or hereafter made 
for cost of street extensions, and all advances heretofore or hereafter made 
for this purpose shall be repaid in full from the revenues of the District of 
Columbia.” 

Attention is called to the fact that the spirit of this legislation has been vio¬ 
lated in the same manner as the act concerning the old debts wns violated; that 
is, by including in the estimates for appropriations items that should have been 
charged solely to the District, and wdien such appropriations were passed these 
items came under the enactment clause which provides for the proportional 
payment by the District and the United States. If it is admitted that the Con¬ 
gress of the LTiiited States did not intend to pay any part of the cost of exten¬ 
sion of streets in this particular area, why should the United States Government 
pay for the expenses in connection with their maintenance, which it has done 
in every year subsequent to the extension of such streets, amounting to millions 
of dollars. This street-extension plan was a speculative project pure and 
simple, and the 37,658.8 acres had an assessed valuation of less than .$7,000,090 
in 1870. From 1889 this section has received all the benefit of the propaganda 
issued by the Washington Star advocating more money from the United States 
for the purpose of “ National Capital building.” It would have been a gracious 
act if a small portion of the amount realized through this system of propa¬ 
ganda had been devoted to the southwest section of Washington City that lies 
in the shadow of the Capitol Building itself, but there is not the slightest evi¬ 
dence showing this, or even any other sections have ever received any benefit or 
moneys for “ National Capital building.” 

In conclusion, I wish to present this picture: On .July 1, 1878, the Govern¬ 
ment of the United States undertook to manage the affairs of the local govern¬ 
ment, which government I have heretofore stated was then bankrupt, and had a 
debt of over $22,000,000. After 45 years of Government management you find 
on July 1, 1922, this debt of $22,000,000 practically eliminated and a cash bal¬ 
ance to the District’s credit of .$8,136,574.44, divided as follows. $7,.574,416.90, 
general fund, District of Columbia ; $311,532.99, trust funds. District of Colum¬ 
bia; $250,624.55, special fund. District of Columbia; and so certified by the 
Comptroller General of the United States. In my judgment, the Congress of 
the United States is entitled to the credit for this showing and the citizens 
should show their appreciation of this fact. But the contrary is true for they 
lose no opportunity to call Congress parsimonious and niggardly in their treat¬ 
ment of the District. 

From the above statement, coupled with the other tabulated statement to 
follow, it would be natural to presume that I am opposed to proportionate 
appropriations. I admit that I am, for the reason tliat any definite percentage 
of appropriations to be paid out of the revenues of the United States resolves 
itself into the fact that this percentage payable by th.e United States is nothing 
more or le.ss than taxing the Government, which is something abhorrent to our 
system of government. At tliis point the question might be asked. Could there 


164 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA 


be a substitute for proportionate ai)propriations? I think Congress would be 
acting in its duly authorized capacity if it gave annually one, twenty, or more 
millions of dollars to the District of Columbia, 

If the proposition to do away with proportional appropriations is sanctioned 
by the Congress of the United States and I were permitted to suggest a sub¬ 
stitute, I would recommend that in order to avoid mistakes made in the past 
in connection with handling the revenues of the District deposited in the United 
States Treasury Department that every dollar of every nature to the credit 
of the District of Columbia on a specified date in the Treasury of the United 
States be withdrawn therefrom and deposited with the Treasurer of the United 
States. Also all revenues of the District as collected should be credited to the 
same account. Also when Congress should decide the amount they would give 
toward the expenses for any particular year a settlement warrant rather than 
an accountable warrant should issue, depositing the amount to the credit of the 
same fund with the Treasurer of the United States, and subject only to the 
check of the disbursing official of the District of Columbia, and that the auditor 
of the District of Columbia, through the commissioners, be required to annu¬ 
ally state a financial account in detail and report the same to the appropriate 
committee of Congress. This method will save the General and District Gov¬ 
ernments thousands of dollars annually and will also save the committees of 
Congress handling District matters much time and worry. 


Square Xo. 155. — As>iessments, 1882 to 1922. 


Year. 

Assessment. 

Rate. 

Tax. 

1882. 

$40,334.00 

$1.50 

.$605.01 

1883.. 

40,334.00 

1.50 

605.01 

1884. 

110, .340. 00 

1.50 

1,655.10 

1885. 

110,340.00 

1.50 

1,6.55.10 

1886. 

110,340.00 

1. .50 

1,6.55.10 

1887. 

164,451.00 

1.50 

2,466.76 

1888. 

164,451.00 

1.50 

2,466.76 

1889. 

164,451.00 

1.50 

2,466. 76 

1890. 

257,125. 00 

1.50 

3,856. 88 

1891. 

257,125. 00 

1..50 

3,856. 88 

1892. 

257,125.00 

1.50 

3,856.88 

1893. 

257,125. 00 

1.50 

.3,856.88 

1894. 

406,597. 00 

1.50 

6,098.9.5 

1895. 

406,597.00 

1.50 

6,098.95 ! 

1896. 

406,597.00 

1..50 

6,098.95 

1897. 

338,106. 00 

1.50 

5,071.59 

1898. 

338,106.00 

1..50 

5,071.59 

1899. 

338,106. 00 

1.50 

5,071.59 

1900. 

316,461.00 

1.50 

4,746. 92 

1901. 

316,461.00 

1.50 

4,746.92 

1902. 

316,461.00 

1.50 

4,746.92 

1903. 

3.36,542.00 

1.50 

5,048.13 


Year. 

Assessment. 

Rate. 

Tax. 

1 1904. 

$336,542.00 

$1. .50 

$5,048.13 

1 1905. 

336, 542.00 

1.50 

5,048.13 

1906. 

358,829.00 

1.50 

.5,382.43 

1907. 

3.58,829. 00 

1.50 

5,382. 43 

1908. 

3.58,829.00 

1.50 

5, .382. 43 

1909. 

354,927.00 

1.50 

.5,323. 91 

1910. 

354,927. 00 

1..50 

.5,323.91 

1911. 

.354,927.00 

1.50 

5, .323.91 

1912. 

338,494. 00 

1.50 

5,077.41 

1913. 

3.38,494.00 

1.50 

5,077.41 

1914. 

338,494. 00 

l.,50 

5,077.41 

1915. 

357,141.00 

1.50 

5,357.11 

1916. 

357,141.00 

1.50 

.5,357.11 

1917. 

.357,141. 00 

1.50 

5,357.11 

1918. 

345,386.00 

1.50 

5, LSO. 79 

1919. 

345,386.00 

1.50 

5,180. 79 

1920. 

345,386.00 

1.50 

5,180. 79 

1921. 

a36,770.00 

1.92 

6,507.02 

1922. 

336,770.00 

1.82 

6,129. 21 


12,064,530.00 


183,501.07 


Note. —This square is bounded on the north by R Street, on the west by New Hamp¬ 
shire Avenue, on the south by Q Street, on the east by Seventeenth Street I’avins- 
sewering, repairing and cleaning streets and sewers during above period that surrounded 
this square have been paid from joint appropriations. 


Statement of increase compensation that has been paid from. nhoUy United 
States appropriations which should have been paid proportionately by United 
States and District of Columbia. 


Fiscal year. 


1918 

1919 

1920 

1921 

1922 


Amount. 

Ratio. 

Payable by 
District of 
Columbia. 

$520.62 

50-50 

$260.31 

1,047. .33 

50-50 

523.67 

2,156. 67 

,50-50 

1,078.33 

2,160. 00 

60-40 

1,296.00 

2,146.67 

60-40 

1,288. 00 



4,446.31 

























































































FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 165 


Statement of^ increase compensation that has been paid from wholly United States 
appropriations ivhich should have been paid proportionately by United States and 
District of Columbia —Continued. 

SALARIES, SUPREME COURT DISTRICT OF COLUMBIA. 


Fiscal year. 

Amount. 

Ratio. 

Payable by 
District of 
Columbia. 

1918. 

$525.00 
663.33 
1,440.00 
1,439.99 
1,440.00 

50-50 

50-50 

50-50 

60-40 

60-40 

$262.50 
331.67 
720.00 
863.99 
864.00 

1919. 

1920. 

1921. 

1922. 


3,042.16 


PUBLIC BUILDINGS AND GROUNDS, DISTRICT OF COLUMBIA. 


1918. 

$19,365.53 
30,149. 27 
67,496.72 
70,031.55 
80, 445.73 

50-50 

$9,682. 76 
15,074.64 
33,748.36 
42,018.93 

1919. 

50-50 

1920. 

50-50 

1921. 

60-40 

1922. 

60-40 

48, 267.45 





148, 792.14 


NATIONAL ZOOLOGICAL PARK, DISTRICT OF COLUMBIA. 


1918. 

$4,471. 23 
7,372.68 
16,503.32 
16,851.75 
18, 875.13 

50-50 

50-50 

50-50 

60-40 

60-40 

$2,235. 62 
3,686.34 
8,251. 66 
10,111.05 
11,325. 08 

1919. 

1920. 

1921. 

1922. 

Total... 

35,609. 75 

191,890.36 





Statement of appropriations that have been paid wholly by the United States 
that should have been paid jointly by United States and District of 
Columbia. 


Survey for connecting parkway between Rock Creek and Potomac 
Parks, sundry civil act, Mar. 3, 1915; amount appropriated, 

$5,000, 50-50_ $2,500.00 

Additional land for National Zoological Park: 

Sundry civil act, June 5, 1920; appropriated, $80,000, G0-40_ 48,000.00 

Sundry civil act. Mar. 4, 1921; appropriated, $2,500, 60-40_ 1, 500. 00 

JMaintenance and repair of Aqueduct Bridge, District of Colum¬ 
bia, public act No. 82, May 18, 1916; appropriated, $25,000, 

50-50_'_ 12, 500. 00 


Total_ 64, 500. 00 


Statement of reimbursements heretofore made by the District 
of Columbia on account of— 

Washington Market Co., act Mar. 4, 1915_ 158,437.50 

Interest, etc., 3.65 bonds. District of Columbia, act Mar. 4, 

1915_ 586, 067. 23 

St. Elizabeths Hospital, District of Columbia, act Mar. 4,1913_ 719, 536. 09 
St. Elizabeths Hospital, District of Columbia, act July 1,1916_ 282, 754. 26 

Public schools. District of Columbia, act Aug. 31, 1918- 97. 740. 50 

Jail, District of Columbia, act Aug. 31, 1918_ 125, 000. 00 

Unpaid balance of advance. District of Columbia, act July 11, 

1919_-_ 75,0001.00 

Public schools. District of Columbia, act July 11, 1919- 75, 000. 00 v 

Public schools, Georgetown, D. C., act July 11, 1919- 50,865.00 


Total_ 2,170,400.58 





























































166 FISCAL KELATIONS BETWEEN V. S. AND DISTRICT OF (X)LITMBIA 

Wofihinf/io'n Maikrt Co. r/.s-.vr.so?o/r;//.'''. 


Fiscal year. 

Land. 

1 Improvements. 

Amount. . 

Rate. 

Tax. 

Amount. 

Rate. 

Tax. 

1379, 

$364,600.00 
364,600. 00 
163,800. 00 

1 

$1.70 

$5,198.20 


$1.70 


1873 

1.70 

6,198. 20 


1.70 


1874. 

2.00 

3,276. 00 

$100,000.00 

2.00 

$ 2 , im. (K; 

187.5 . 

163,800.00 

3.00 

4,914.00 

100,000.00 

.3.00 

3,000. 00 

187fi . 

1..50 

6,471. 00 

100,000.00 

1, .50 

•],.500.00 

1877 . 

431,400. 00 

1.50 

6, 471.00 

100,000.00 

1. .50 

1. .500. 00 

1878 . . 

431,400.00 

1.50 

/ 6,471.00 
\ 39,999.40 
4,212.00 

|l00,000.00 

1..50 

/ 1..500.00 

\ 9. .500. 00 

2,220. 00 

1879. 

280,800.00 

1.50 

148,000.00 

1..50 

1880. 

281,000.00 

1..50 

4,21.5.00 

148,000.00 

1. .50 

2.220.00 

1881. 

320,166.00 
320,166.00 
320,166. 00 

1..50 

4, .802.49 

148,000.00 
148,000. 00 

1..50 

2,220. 00 

1882. 

1.59 

4,802.49 

1.59 

2.220. 00 

1883. 

1.50 

4,802. 49 
4,802.49 

148,000.00 

1. .50 

2. 220.00 

1884. 

320,168. 00 

l..¥l 

148,000.00 

1.50 

2,220.00 

1885. 

320,166. 00 
320,166. 00 

1.50 

4,802.49 
4,802. 49 

148,000.00 

1..50 

2.220.00 

1886. 

1..50 

148,000.00 

1.50 

2.220.00 

1887. 

320', 166.00 
320,166.00 
320,166.00 
320,166. 00 
320,166. 00 

1..50 

4,802. 49 

188,000.00 

1..50 

2,820. 00 

1888. 

1.50 

4,802. 49 

188,000.00 
188,000.00 

1.50 

2,820. 00 

1889. 

1.50 

4,802. 49 

1.50 

2,820.00 

1890. 

1.50 

4,802.49 

188,000.00 

1.50 

2,820. 00 

1891. 

1.50 

4,802. 49 
4,802.49 

188,000.00 

1.50 

2,820. 00 

1892. 

320,166. 00 

1.50 

188,000.00 

1.50 

2,820.00 

1893. 

320' 166. 00 
426,888. 00 
426,888. 00 
426,888. 00 
428,888.00 

1.50 

4,802.49 

188,000.00 

1.50 

2,820.00 

1894. 

1.50 

6,403.32 
6,403. 32 
6,403.32 
6,403.32 
6,403.32 

188,000.00 

1.50 

2,820.00 

1895... 

1..50 

188,000.00 

1.50 

2,820.00 

1896. 

1.50 

188,000. 00 

1.50 

2,820.00 

1897. 

1.50 

188,000.00 

1.50 

2,820.00 

1898. 

426,888.00 

1.50 

188,000. 00 

1..50 

2,820. 00 
2,820. 00 

1899. 

426,888. 00 
426,888.00 
426,888. 00 

1. 50 

6,403.32 

188,000. 00 
188,000. 00 
210,000. 00 
210,000. 00 

1.50 

1900. 

1. 50 

6,403.32 
6,403. 32 

1.50 

2,820.00 

1901. 

1.50 

1.50 

3,1.50. 00 

1902. 

426,888. 00 

1.50 

6,403.32 

7,203. 74 

7,203. 74 

1.50 

3,1.50.00 

1903. 

480' 249.00 
480,249. 00 
480,249.00 
480,249. 00 

1.50 

225 ; 000.00 

1.50 

3 ; 375.00 

1904. 

1..50 

226,500.00 

1.50 

3,397. .50 

1905 

1.50 

7,203. 74 

226, .500. 00 

1.50 

3,397. 50 
3,397. 50 
3,435.00 
3,457. 50 
6,750.00 

1908. 

1.50 

1, 203. 74 

226' 500. 00 

1. .50 

1907. 

480' 249. 00 
480,249. 00 
533,610. 00 

1..50 

7,203. 74 

229,000. 00 

1.50 

1908. 

1. .50 

7,203.74 

8,004.15 

8,004.15 
8,004.15 

230,500. 00 

1.50 

1909.. 

1.50 

450,000. 00 
450,000. 00 

1.50 

1910. 

533,610.00 
533,610.00 
533,610. 00 
533,610.00 
533,610. 00 

1.50 

1.50 

6,750.00 

1911. 

1.50 

4.50,000. 00 

1.50 

6,7.50.00 

1912. 

1.59 

8' 004.15 

450,000. 00 
450,000. 00 

1.50 

6,7.50.00 
6, 750. 00 

1913. 

1.50 

8' 004.15 

1.50 

1914. 

1.50 

8', 004.15 
12,006. 23 

450 ; 000. 00 

450,000. 00 

1.50 

6', 750. 00 
6,750.00 
6,7.50.00 
6,900.00 
6,900.00 
6,900.00 
6,900.00 
8,970.00 
6,279. 00 

1915. 

800,415. 00 
800,415.00 
800,415.00 
800,415.00 
800,415.00 
800,415.00 
800,415.00 
800,415.00 

1. .50 

1. .50 

1916. 

1. 50 

12'006. 23 

450,000. 00 

1.50 

1917. 

1.50 

12'006. 23 

460; 000. 00 
460,000.00 

1.50 

1918. 

1.50 

12,006. 23 

1.50 

1919. 

1.50 

12' 006. 23 
12,006. 23 

460', 000.00 
460,0(X). 00 
480,000.00 

1.50 

1920. 

1. 50 

1..50 

1921. 

1.95 

15' 608. 09 

1.95 

19221.. . 

1.82 

lO' 925.67 

460'000.00 

1.82 




Total taxes. 



358,307.13 



190,349. 00 








1 To March 31, tiiree-fourths of year. 


Statement in conneetion icitJi the Washington Market Co. 


The total land tax paid by the Washington Market C’o. amounted to_ $358, 307.13 


From which deduct the amount paid from 1872 to 1878, inclusive_ 39, 999. 40 


Leaving a balance of_ 318, 307. 73 

Which balance was credited to the general fund of the District of 
Columbia, against which balance there was required from the 
United States revenue to meet appropriations the sum of_ 310, 599. 73 


Making a total sum from United States Treasury used for 

District of Columbia expenses, amounting to_ 628, 907. 46 


Kents paid Washington Market Co. on account of District of Co¬ 
lumbia Militia for armory from 1890 to 1916_ 169,801.65 

Paid from United States revenue, 50 per cent_ 84, 900. 83 


































































































FISCAL RELATIONS BETWEEN T 


S. AND DISTRK'T OE COLUMBFA. 167 


1 lie asliiiijxtoii Marlvet Co. lint! a lease for 99 years at an animal 
rental of $25,000. wb eh was reduced to .$20,000. The rental was 
further reduced to .$7,5(X). These I'enials were devoted to the 
purpose of relieving the poor of the District of Columbia. Tlie 
amount of tliese rentals received from 1S71 to 1879. inclusive. 


amounted to- .8X0,801.38 

hich sum was used for relievin.cj the sulferiiig poor of tin* Dis¬ 
trict of Coliiml) a. In addition to this sum there has been appro¬ 
priated by congressional acts for tlu^ relief of the poor, the fol¬ 
lowing sums: 

Act of Feb. 15, 1870_ .80, OlK). ('U 

Act of Apr. 20, 1871_1_ 12, 000. Ou 

Act of Mar. 8, 1875- Ip' (K)o! 00 

Act of Feb. 5, 1877- 20,000.00 


Making a total of- 1.52,361.38 


From .Jan. 1, 1879, to Mar. 31, 1921, a period of 42 years and 3 

months, there has been collected the sum of_ 316, 875. 00 

There has been deducted from the District's revenues the sum of__ 1.58, 437. .50 


As per report of AVilliam W. Spalding, H. Res. 203 of the Sixty-third Congress. 

The lease of the market company was terminated by the act of March 4, 1921, 
since which time settlement of taxes were made as of March 31, 1921. 

There has been paid out of the revenues of the United States in settlement of 
claims of the Washington Market Co. the sum of .$751,721.75, leaving some 
claims not yet adjudicated. 


Statements showing effect of section 7, act Fehruary 22, 1921. 


Items under “ Rents, etc.” : 


United States 
loss. 


Wharves, street, $19,962.06 ; 50 per cent, $9,981.03 ; 40 per cent, 

$7,984.82_ 

Fish wharves and market, $16,707.91; 50 per cent, $8,353.96; 


40 per cent, $6,683.16_ 

A^ault space, fiscal year— 

1917, $8,945.31; 50 per cent, $4,472.65; 40 per 

cent, $3,587.12 ; loss_ $894. 53 

1918, $13,893,52; 50 per cent. $6,946.76; 40 per 

cent, $5.557.41; loss_ 1, 389. 35 

1919, $15,684.12; 50 per cent, $7,842.36; 40 per 

cent, .$6,273.89; loss_ 1,568.47 

1920, $16,895.10; 50 per cent, $8,447.55; 40 per 

cent, $6,758.04 ; loss_ 1, 689. 51 

1921, $15,048.22; 50 per cent, $7,524.11; 40 per 

cent, $6,019.29; loss_ 1, 504. 82 

1922, $16,326.54; 50 per cent, $8,162.27; 40 per 

cent, $6,530.62; loss_ 1,632.65 


Items under “ Miscellaneous ”: Railroad tax Highway Bridge; 
$25,000; 50 per cent, $12,500; 40 per cent, $10,000_ 


$1, 996. 21 
1, 670. 80 


8, 679. 33 
2, 500. 00 


Total United States loss. 


14, 846. 34 
























168 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA 


Collections on account of rcinihin'sahle ta.vcs. 


Fiscal year. 


1903 

1904 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 


Tax. 

Penalty. 

Fiscal year. 

Tax. 

$1,049.67 

$45.30 

1916. 

$530.00 

1,042.47 

85. 27 

1917. 

707.57 

388.97 

27.36 

1918. 

771.68 

1, 250.33 

61.13 

1919. 

996.70 

1,236.32 

13. 29 

1920. 

178. 79 

448.63 

12. 79 

1921. 

1, 827.44 

764. 65 

54. 28 

1922. 

1,000.04 

1,029. 89 

69. 36 


1,582. 90 

11.03 

Total. 

17,808. 06 

814. 24 

1.28 

50-50 per cent. 

8,904.03 

278. 75 

24.42 



1,380.43 

9.21 

Balance to credit of reim- 


528. 59 

4.12 

bursable tax June 30,1922. 



Penalty. 


S12.03 


430.87 
215.43 


12,858.97 


SUMMARY. 

Amounts due United States on— 

Collections. $8,904.03 

Penalty. 215.43 

Balance 50-50. 6,429.48 


Total 


1.5,548. 94 


CoUections on account of Farmers' Produce Market. 


Fiscal year. 

Collections. 

Fiscal year. 

Collections. 

1907. 

$4,921.60 

5,874.50 

5,554. 20 

5.304.60 
5,242.70 1 
5,463.40 i 
6,123. 30 I 
6,521.30 t 
8,096.60 , 

8.734.60 j 

1917. 

$8,600.60 
8,699.90 
10,422.45 
9,928. 20 
11,047.10 
10,475. 70 

1908. 

1918. 

1909. 

1919. 

1910. 

1920. 

1911. 

1921. 

1912.... 

1922. 

1913. 

Total. 

122,010. 95 
61,005. 48 

1914. 

1915. 

50-50. 

1916... 



Stateynent of the collections of the office of eolleetor of taxes, District of 

Columhia. 


Levy. 

Tax. 

Penalty. 

REALTY T.^XES 

1922. 

$7,261,141.58 

$1,967.42 

1921. 

1,155,847.32 

69,990.71 

1920. 

4,100. 81 

740.61 

1919. 

2,424.23 

671. 64 

1918. 

1,892.01 

672. 75 

1917. 

766.71 

323. 03 

1916. 

722.39 

277.68 

1915. 

509.88 

300.10 

1914. 

453.53 

297. 43 

1913. 

423.36 

880. 28 

1912. 

227. 08 

178. 21 

1911. 

192.03 

171.26 

1910. 

205. 61 

189.44 

1909. 

187.04 

202. 57 

1908. 

200. 68 

213.31 

1907. 

172.03 

235.29 

1906. 

156.59 

222. 69 

1905. 

136. 56 

212.21 

1904. 

25.07 

42.37 

1903. 

35. 72 

58.50 

1902. 

184.73 

238.77 

1901. 

44.49 

13. 51 

1900. 

38.76 


1899. 

136.24 


1898. 

28.82 


1897. 

1.39.30 

5. 20 

1896. 

199.89 

14.41 

1895. 

187. 92 

11.51 

1894. 

198.37 

17.85 

1893. 

32.31 

8.93 

1892. 

32.23 

9.24 

1891. 

22.22 

7.08 

1890. 

10. 65 

7.37 

1889. 

7.80 

4.06 

1888. 

2.40 

4.37 

1887. 

1.6.3 

4.08 

1886. 

1.08 


1885. 

9.33 





Levy. 

Tax. 

Penalty. 

REALTY TAXES—COn. 

1884. 

$1.08 
2.18 
2.18 
38.18 
38.18 


1883. 


1882. 


1881. 


1880. 


Total. 

TANGIBLE PERSONAL 
TAX. 

1923 (other rate). 


8,451,180.23 

$77,696. 88 

500.00 
1,138,801.34 
1,348,285.02 
180,686. 68 
1,634.04 
252.00 
9.00 

7. 20 
22. 61 
21.60 
21.60 
45.83 


1922 ($1.52 rate). 

1922 (other rate). 

1921. 

375. 59 
7.02 
8,484.36 
235.42 
46.98 

1920. 

1919. 

1918. 

1917. 


1916. 


1915. 


1914. 


1913. 

Total.j 

INTANGIBLE PERSONAL 
TAX. 

1922. 

.91 

2,670,284.92 

9,150. 28 

916,270.01 
30,388.70 
2,345.29 
54.00 


1921. 


1920.. 


1919. 


Total. 

Special reimbursable 
taxes. 


949,058.00 

949,058. 00 

1,000.04 

1,000.04 























































































































































































































FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 169 


Total collections for flscni year hi the l>istri(‘t of Columhia and the United-. 

States, (iO-.'iO. 

Fees: 

Advertising taxes_ $5, 023. 00 

Building permits_ T)!, 126. 34 

Crematorium_ 1. 796. 00 

Electrical permits_ 13. 713. 00 

Gas and meters___ 4, 367. 40 

Health department_ 962. 00 

Municipal court- 46, 217. 92 

Bound- 2,165. 00 

I'liblic convenience stations_ <S, 280. 72 

Bailings, etc__ 1, 476. 00 

Sewer and gas permits_ 9, 201. 00 

Surveyor’s fees_ 10, 503. 80 

Tax certiticates___ 8.087.00 

Water-service permits_"_ 3. 066. 00 

Sealer weights and measures_ 1. OO 

Electric meters_ 428. 20 

Rents: 

M'harves. street termini, buildings, etc_ 19.962.06 

Fish wharves and market_ 16. 707. 91 

Washington Market Co_ 5, 625. 00 

Vault space, 1922_ 16.326.54 

Vault space, 1921_ 15, 048. 22 

Vault space, 1920_ 16.895.10 

Vault space. 1919_ 15. 684.12 

Vault space. 1918_ 13.893.52 

Vault space, 1917_ 8,945.31 

* 

Old material- 5. 680. 77 

District regulations_ 16. 26 

Workhouse_ 32, 991. 66 

Reformatory_ 507. 67 

Garbage grease_ 95, 787. 71 

Miscellaneous trash- 31. 709.86 

Home for Aged and Infirm_ 370. 00 

Industrial Home School for Colored Children_ 5.16 

National Training School for Girls_ 4. 00 

Special assessments: 

Sewers— 

Assessment and permit work__ 34, 452. 93 

Interest_ 411. 88 • 

Sidewalks, curbs, alleys— 

Assessment and permit work_ 130. 502. 69 

Interest_ 1,153. 00 

Paving roadways_ 103.647.95 

Interest_ 1. 654. 88 

Small parks_ 5. 681. 65 

Interest_ 207.13 

Miscellaneous items: 

Board and care of insane_ 36. 673. 26 

Tuition nonresident pupils- 8, 646. 55 

Police court unclaimed collateral- 3,079.00 

.Tudgments_ 37.20 

Damages to District i)ropcrty_ 2. 818. 59 

Repairs to Calvert Street Bridge- 25, 000. 00 

Forfeit guaranty deposited- 1, 915. 58 

Medical charities- 40.00 

Contract damages- 399. 25 

Sale of property seized- 42. 76 


Total 60-40_ <S49, 941. 55 

32894—S. Doc. 301, 67-4-12 


























































170 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 
Total collections for fiscal year in the District of ColumMa, all. 

Fggs I 

Motor-vGhiclG tags_.$317,015.00 

DuplicatG motor tags_•_ 1, 059. 00 

PinGs: 

PolicG court_ 3G0, IfX). 93 

JuvGuilG court_ 864. 66 

Licenses: 

Dog tags_ 24, 439 48 

Elevator oi3Grators_ 267. 50 

Engineers_ 453. 00 

Insurance_ 27, 884. 99 

Transfers_ 85. 00 

Miscellaneous_ 158, 111. 78 

Transfers_ 189. 00 

Motor-vehicle operators_ 34, 652. 50 

Plumbers_ 39. 00 

Rents: 

Eastern Market_^_ 7, 424. 53 

Western Market_ 6, 896. 40 

Georgetown Market_ .377. 80 

Wholesale produce market_ 10, 475. 70 

Miscellaneous items insurance taxes_ 192, 309. 22 

Special assessments: 

Street extensions_ 28, 691. 64 

Interest_ 5, 845. 98 


Total, all District of Columbia_ l _ 1.178,273.11 

Total collections for fiscal year in the Distriet of Columbia and the United 

States, one-half each. 

Reimbursement court costs_ $135.10 

Special assessments: 

Sewers— 

Assessment and permit work_ 16, 802. 56 

Interest_ 1, 830. 72 

Sidewalks, curbs, alleys— 

Assessment and permit work_ 43,832.12 

Interest_ 5, 488. 16 

Various sections_ 19. 96 

Interest_:_ 14.27 

Paving roadways_ 68,105. 55 

Interest_ 7, 67.5. 97 

Interior park_ 638. 41 

Interest_237. 33 

Small parks_ 105. 00 

Interest_ 23. 57 

Street extensions_ 50. 00 

Interest_ 17. 78 


Total 50/50_ 144, 976. .50 

Total trust and special funds. 

Water fund: 

Water rents- .$943,182. 45 

Taps and stop-cocks__ 12,145. 45 

Water-main assessments_ 83, 746. 41 

Interest- 2, 679.15 

Sales of material_ 2, 455. 59 


Total- 1, 049, 208. 95 


















































fiscal relations between U. S. and district of COLUMBIA. 171 


Washington reden^ption fund: 

Principal_ 

Interest _ 


189, 381.89 


Permit fund - 859 28 

Surplus fund___ 217 00 

Miscellaneous trust fund deposits_ 927 060.17 

Escheated Estates relief fund_ l’ 307. 44 

1 ndustrial Home School fund_ 3’ 030. 22 


Policeman and firemen’s relief fund: 

Fines, t>olicemen__ 1 722 . 99 

Donations_ ’ 15 OO 

Sales- 2 ,153*. 48 


$169, 086.15 
20, 295. 74 


Total- 3 ^ 891. 47 


Grand total_ 2, 220, 622. 42 

Total Repayment to appropriations, 50-50: 

Purchase contsruction materials_ ,345. 65 

Electrical department, 1920_ 151. 99 


Total- 497. 64 


Total repayment to appropriations, 60-40_ 78, 028. 45 

Special funds- 18, 293. 50 


Repayment to appropriations, wholly District of Columbia: 

Alleys: 

Assessments_ 7,171.12 

Interest_ 507. 61 

Total_ 7, 687. 73 


RECAPITULATION. 

Realty taxes- 8, 431,180. 23 

Tangible personal taxes_ 2, 670, 264.92 

Intangible personal taxes_ 49, 056. 00 

Special reimbursable taxes_ 1, 000. 04 

Penalty realty taxes_ 77, 696. 88 

Penalty tangible personal taxes_ 9,150. 28 

Penalty special reimbursable taxes_ 72, 488. 25 

IVIiscellaneous: one-half_ 309, 964. 92 

Miscellaneous ; 60 per cent_ 1,178, 273.11 


Total to general fund_ 13,899,096.63 


United States: 

Miscellaneous: one-half_ 72, 488. 25 

Miscellaneous: 40 per cent_ 399, 976. 63 

Trust and special funds_ 2, 220, 622. 42 

Repayments to appropriations : 50-50- 151. 99 

60-40_ 96, 667. 60 

Wholfy District of Columbia_ 7, 678. 73 

Grand total_ 16, 636, 682. 25 

Amount deposited with the Treasurer of the United States ac¬ 
count_ 27,014.87 

Sundries_16, 420, 667. 38 

Policemen and firemen’s relief fund_ 189,000,000 































































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9 


\ 


HEARINGS BEFORE THE JOINT SELECT COMMITTEE OF 
THE CONGRESS OF THE UNITED STATES, SIXTY- 
SEVENTH CONGRESS, ON FISCAL RELATIONS 
BETWEEN THE UNITED STATES AND THE 
DISTRICT OF COLUMBIA. 


173 















w '• -IkS * . 

!> • ^/- • V -fMS .#»J 


t'A'- . .-'■■^ ■r ^ . .- - ., 






FISCAL RELATIONS BETWEEN THE UNITED STATES AND THE 

DISTRICT OF COLUMBIA. 


Thursday, August 22, 1922. 

Hearings by joint select committee of the Senate and House of Representa¬ 
tives on fiscal relations between the United States Government and the District 
of Columbia subsequent to July 1, 1874. 

The joint select committee met at 11.30 o’clock a. m., in the room of the 
Committee on the District of Columbia in the Capitol, Semitor I.awrence C. 
Phipps presiding. 

Present, Senator Phlpi)s (chairman), and Reiiresentatives Evans, Hardy of 
Colorado, and Wright. 

There appeared before the committee INIr. Herman J. Galloway and Mr. 
Joseph C. Fehr, representing the Department of Justice; Mr. C. G. Croggon, 
and Mr. P>. F. Hill, representing Haskins & Sells, certified public accountants; 
Mr. Daniel J. Donovan, auditor of the District of Columbia; Mr. Earl Taggart, 
representing the General Accounting Oflice; and Mr. Thomas Hodgson. 

The Chairman. The meeting will come to order. The purpose of having 
this meeting or conference at this time is that the members of the joint select 
committee may have an opportunity to receive information relative to the 
general condition of the records of accounts, so that they may obtain some idea 
of the magnitude of the work that has been assigned to the committee and the 
most exiieditious manner in which the accountants who have been employed 
to audit may proceed with the work, to the end that we may make a speedy 
report to Congress, even if the first one of necessity should have to be in pre¬ 
liminary form. 

To that end I have requested for the committee that the representatives of 
Messrs. Haskins & Sells; the representatives of the Attorney General, Mr. 
Galloway and Mr. Fahr; IMr. Taggart, from the Comptroller General’s office; 
and Mr. Donovan, the auditor of the District of Columbia, meet with us here, so 
that we can have a good, homelike talk, and do what we can along the line 
of cooperation to secure results. 

Mr. Hill, of Haskins & Sells, has had an opportunity to spend some days on 
the records, and I think we might first hear from him. 

Statement of Mr. B. F. Hill. 

Mr. Hill. I did discuss with you over the telephone. Senator, that we were 
holding a preliminary conference between those in interest, at which time I 
went over what I will bring up here to-day. 

I think we all agreed—1 hope we did; at least, there was not any disagree¬ 
ment—that the first thing was to get balances at July 1, 1911, due to and by 
the United States by and to the District of Columbia, assuming that our work 
for the present was only on the period between July 1, 1911, and June 30, 1922. 
We would have to assume that there was at tliis time a question of going hack 
over the period up to July 1, 1911, and satisfying the committee of the things 
which will be taken up with them later. 

It has been said by some that we were only interested in the general fund; 
but, having been on the work for about 10 days, I disagree with them, and 
feel that what we ought to prepare first is the gross receipts from all sources 
in the District, and to what account deposited, being prepared by years and 
the total for the period. This would include amounts collected and deposited 
in accordance with law by the collector of taxes and others in tlie general 
fund, water fund, and other funds, and to the United States Treasury direct. 
We would satisfy ourselves that collections reported by the collector of taxes 
were properly shown as having been covered into the United States Treasury; 
that the charges to the collector, account of taxes, for example, is based on 
the assessment; that crediis taken are approximately coiTect; and that taxes 

175 



176 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


iiiipuid as reported by iiiiii are in agreement with his record. Tliat means 
that otherwise we would not go back further into his record to satisfy our¬ 
selves on the taxes otherwise not outlined here, 

Representative Evans. Let me ask ydu a question. What you mean is that 
you assume the extensions on tax lists or rolls are correctly made, and the 
collections correctly shown on those rolls, and you would not go into that? 

Mr, Hill. No ; except that we would have the basis. 

Representative Evans. Yes, I understand. 

Mr. Hill. And we could check the total amount charged to the collector on 
account of taxes for a particular year and satisfy ourselves that was correct. 

The Chairman. At this point may I ask this question: Have those records 
of the tax collector been audited; and if so, by whom? 

]Mr. Hill. They have been audited by the United States Government, I 
would say. That is correct, Mr. Donovan? 

]Mr. Donovan. I will answer that question, Mr. Chairman. The tax records 
in the tax collector’s office, as well as all records of the District offices pro¬ 
ducing revenue, are audited by the auditor for the District of Columbia. 

Representative Evans. And only by him? 

I\Ir. Donovan. And only by him; yes, sir. 

.Mr. Hill. He sends a copy of his report to the Treasury? 

Mr, Donovan. No ; he reports to the commissioners. 

Mr. Hodgson. Excuse me for interrupting there; I think that is a rather 
limited view of the matter. I think that is audited by the Government. 

Mr. Donovan. There is a daily report. We submit a daily report which 
is prepared by the auditor for the District and submitted to the General Ac¬ 
counting Office. I understood Mr. Hill and the chairman to be speaking of 
original records. 

The. Chairman. Yes, we were. 

^Mr. Hill. The reports of the collector become a part of the records of the 
linited States Government? 

Mr. Donovan. The daily reports of the collector of taxes. 

]Mr. Hill. Is there anything further on that line? 

The Chairman. I think not. 

Mr. Hill. We would also satisfy ourselves that the other deposits are in 
agreement with the records at the source of such deposits. In other words, 
the surplus from the office of the register of wills goes directly into the 
United States Treasury. This would comprehend gross receipts from all 
sources within the District. That would be one side of the entire proposition, 
the other side being the gross disbursements in the District for all puiposes. 

Representative Evans. Now, may I ask a question there? Taking up the 
register of deeds, who audits his accounts—that is, going to the base of it, I 
mean? 

Mr. Hill. I do not know. I am not in a position to say that. 

Representative PIvans. His account is not audited at all, is it. Colonel 
Donovan ? 

IMr. Donovan. No, sir; he submits an account of receipts and expenditures 
to the General Accounting Office. The accounts of the recorder of deeds and 
the register of wills are not audited by any Federal or municipal authority 
of which I have knowledge. 

Representative Evans. That was developed last year, I thought. 

Mr. Donovan. Neither of those offices come under the jurisdiction of the 
Commissioners of the District of Columbia. 

Representative Evans. And the Federal Government dot^s not have juris¬ 
diction? 

Mr. Taggart. We do get an account current from them every three months. 

Representative Evans. But that is checked by no reference back to the basic 
item or to the amount on the record that was received? 

Mr. Taggart. No. 

i\Ir. Hill. I was taking care of that. We were not going back of his figures, 
as shown by his books, as being the surplus of li's fund; of either of the 
offices, deposited in the United States Treasury. 

Mr. Hodgson. The law says that the fees of the office are subject to the 
])ayment of his expenses. He can pay his expenses out of what he collects. 

]Mr. Hill. But there does happen to be a surplus fund. 

Ml'. Hodgson. That is what is left afterwards. 

The Chairman. Yes; but while it may not be the province of this committee 
to order an audit of these records would it not be proper for us to call that to 


FISCAL RELATIONS BETWEEN FT. S. AND DISTRICT OF COLUMBIA. 177 

I 

the attention of the comptroller, so that he nniy anincce t(> have those ac¬ 
counts audited at their source? 

Representative Hakdy. It looks to me like a commissioner’s joh. 

Mr. Donovan. Neither of those offices come under the commissioners. The 
head of each office appoints his own employees and pays the emplo.vees from 
the fees of the office. 

Mr. Galloway. Is there any authority of law for the control of such (»flices 
as those? 

The Chairman. If there is not, we want to look into that. I would ask 
that Mr. Galloway make a note of that and inquire into that. 

Mr. Hodgson. I would not be suiTrised if you would come across tliis 
problem to solve, there. Those expenditures are under the jud^e of the Supi-eme 
Court of the District of Columbia. He certifies that account. The law requiies 
him to certify that account. 

The Chairman. We will have that inquired into. I think, for the purposes 
of this present audit, we shall have to assume that those records will have 
to be accepted; that is, we shall have to assume that the audit conducted by 
the auditor for the District of Columbia properly covers the accountinjr work 
of the business of the tax collector’s office. 

Mr. Hill. There are certain su 2 :gestions, and probably some criticisms of 
that kind, that we could brin.ir out later on alonp: that line, and also alon^ the 
line of having? deposits made cominj? throujih one source probably being turned 
over to the collector of taxes and by him making all deposits, but I do feel that 
all of that is really foreign to what we are attempting to do this morning. 

The Chairman. Well, may I say, Mr. Hill, that while this committee has been 
authorized to perform certain work, anything that develops as a side issue that 
would be in the interest of the Goveiaiment we would appreciate having you 
gentlemen as auditors call our attention to so that if we are not a properly con¬ 
stituted committee to act upon it we may act in our congressional capacity, and 
as individuals may take such steps as may appear to us necessary to improve 
the manner of checking and keeping the records, whether they be of the 
District of Columbia or of the Federal Government. 

INIr. Hill. I do not feel that we would have completed our work if we had not 
gone along that line. 

We will check the appropriations made by Congress for the period under 
review’, w’atching carefully for the division of the cost of expenditures as be- 
Dveen the United States and the District of Columbia because of the various 
changes that occur through the different years. 

Attention will be given to such appropriations as may for some reason not 
have been spread against the United States and the District on the regularly 
accepted basis. It is our understanding that disbursements made are not to be 
checked by us as to accuracy of the audited vouchers. That might probably 
l)ring up some discussion. We w’ould not go back of the audited vouchers. 

The Chairman. Those vouchers w^ere audited by the District auditor? 

Mr. Donovan. And the General Accounting Office as well. 

The Chairman. And the genej*al accounting officers also, so as to have two 
audits, is that correct? 

Mr. Donovan. That is correct. 

]Mr. Hill. There is one other note I have made on the line of the chairman’s 
reference a moment ago, I have just noted here that nothhig here is to be 
interpreted as meaning that any inaccuracies that might come to our attention 
will be allow^ed to go by unheeded, but rather that proper note will be made 
and handled consistent with the demands of the situation. What I mean by 
that is that if anything did come to our attention that w’as beyond the sco]ie 
of our work w’e w’ould not pass it as not within the scope of our w'ork. 

The Chairman. No ; as stated a moment ago, the members of the committee 
w'ould appreciate it if you w'^ould make special notes of those things, so that 
w'e mav handle them as w^e think they should be handled. 

Mr. Hill. This little note here shows that w’e, too, had that in mind. These 
disbursements w’ould include the items of interest and principal payments on 
account of the public debt of the District of Columbia in addition, of course, 
to all other disbursements; these dislnirsements to be summarized by years, 
div'ded as betw’een the general fund and trust fund, etc., and so further sub¬ 
divided as to show’ disbursements in comprehensive groups as maintenance, up- 
huilding. health, recreation, etc. It is believed that it w’ould be interesting to 
tbe committee to have that, particularly the general fund, so subdivided. 

The Chairman. Would that entail any very great amount of extra labor 
to segregate those items? 


178 FISCAL RELATIONS BETWEEN U. S. AND DISTRUST OF COL U MB FA. 


have to he 
additional 


aeeinnn- 
lahor to 


he accoinplislied hy 
into classitieatioins 
for maintenance of 


of 


Mr. Hill. Well, it will, some; hat tlie information will 
lated .lust the same. There would ))e pi'ohahly some little 
give that subdivision. 

Mr. Honovan. May I inquire, at tins i)oint, what is to 
the division of expenditures from District appropriations 
such as suggested hy Mr. Hill, for instance, expenditures 
playgrounds, protection of life ami property, sanitation, and so on down the 
line? 1 do not think that particular kind of information is really material to 
the purposes of this investigation. 

Mr. Hill. It differentiates, here. 

The CiiAir.MAN. There is reference to those various activities made in the 
law itself. The information as collated might prove of some service as a 
guide to the Committee on Appropriations when they have the Budget esti¬ 
mates under consideration for the ensuing year and followin.g years. I would 
like to have your view on that, Mr. Evans. 

Uepresentative Evans. As to Colonel Donovan, I think he saw the force 
what is in the suggestion of Mr. Hill when he took up one of the activities 
of the District, as showing the amount that it had received as compared with 
the others. I refer to the matter of education. Now, it was illuminating and 
instructive, both. 

Mr. Donovan. I grant you that; but the thought that I had in mind was 
in respect to the classification of our expenditures into certain groups. It 
would be a matter of information, I will confess, as far as the committee is 
concerned, and probably as far as Congress and the appropriations committees 
in particular are concerned; but so far as this investigation is concerned, 
the ultimate purpose of which is to ascertain the existence of the surplus 
revenues claimed by the District of Columbia, I can not see that such infor¬ 
mation could have any material bearing on the investigation. 

Representative Evans. As I understand the chairman, his inquiry was. Would 
there be a very great increase in the expense? 

The Chairman. Yes. 

Repre.sent{itive E^'ANS. And if we could secure that information without 
any very great increase in expense, it would be a consummation to be desire<l. 

Mr. D0N0VL4N. Yes; but it would be purely information. JMay I ask Mr. 
Hill just what form of classification he has mapped out? 

Mr. Hill. I have kept away from that, even here, because after 10 days I 
felt I did not want to tie myself down to what might be done, after the analy¬ 
sis of all the figures might be made. But I do feel this, that it is the 
wish of Haskins »S: Sells, as exjji’essed to me, to give the committee through 
this work we are doing all the available information we could, consistent with 
the time that is allowed to us. It appealed to me that, with certain activities 
of the District subdivided, and with that information in the hands of the 
committee, they were better able to tell than using, say, the general fund as 
a single basis, without any subdivision, as to just what that general fund 
did comprehend. As to certain questions that have arisen, relative to opening 
streets, and relative to that in regard to the water supply of the District, 
that probably woidd be of interest—I think it would—to the committee, to 
just know exactly what each side had ‘contributed toward the expense of 
furnishing water in the District. It may or may not, but I think it would. 

The (Chairman. While, as Colonel Donovan suggests, it coidd have no effect 
upon the ultimate determination of the audit as to the balances standing 
between the District of Columbia and the Federal Government, the informa¬ 
tion could not hurt anyone, and it might be not only of interest but of general 
value as well; so that if it can be set forth without entailing much additional 
expense or labor, it seems to me that it would give us an exhibit in a form 
that would enable us to understand the expenditures in a broader manner, 
and to have more intimate knowledge of just where the money went. 

Mr. Hill. I believe that it will take a little more time, but I feel that the 
benefit derived- 

The Chairman. Do you want to say something, Mr. Hodgson? 

Mr. Hodgson. I want to say that those activities Mr. Hill is speaking of 
are reported by the District of Columbia authorities. 

Mr. Donovan. Our annual reports, Mr. Chairman, set up the classification 
adopted by the United States Census Office in reporting financial statistics of 
cities, giving figures for protection of life and property, for health and sanita¬ 
tion, and so on. There are 11 group classifications, I think. We allocate our 
expenditures each year under those groupings; so that the annual report of 



I’lSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 179 


the auditor for the District of Columbia does show accurately at the end of 
the year, for the information of Conji:ress if Con.uress desires the information, 
the functional distril)ution of the expenditures from appropriations made by 


Congress for the District of Columbia. 

]Mr. Ckoggon. And it can be incorporated in this hearing without any addi¬ 
tional expense. 

IMr. Donovan. Yes. For instance, the accountants could use the auditor’s 
reports for the purpose of compiling the totals and setting up results. 

Mr. Croggon. That answers your question. Senator. It will not take much 
work if it is in that form. 

Mr. Hlll. It was not mj’ purpose to hold down strictly to that separation 
that is already made. There would be some change in it. 

The Chairman. That is to say, if you feel that the classitication that has 
been in use does not give as clear and full an exhibit of the activities as could 
he shown by a rearrangement? 

]\Ir. Hill. Well, witliout attempting to criticize that already in use, I will 
say that I believe it could be changed without a whole lot of labor, and in my 
opinion better show the several activities of the District. 

IMi'. Donovan. Mr. Chairman, that may Ire true if you are going to consider 
the District alone; 1 grant you that. You may go into greater detail. But 
what I wanted to make clear was this, that it is the classitication adopted by 
the United States Census Office for the puriiose of setting up comparative tinan- 
cial statistics of municipalities. 

The Chx\irman. Of course, in considering the matter the committee will make 
comparisons with statistics of other cities, and particularly those of like size, 
so that any great departure from what has been set up as the standard may 
serve only to confuse; and I would suggest that you study that pretty care¬ 
fully. and in the meantime allow that to remain open for the present. Do you 
not think so? 

iMr. Hill. Without attempting to further discuss that, the idea would be in 
some instances only to further subdivide those that have been already shown, 
so as to bring out certain pertinent facts. 

Representative Evans. Then, if I understand you, you do not contemplate a 
different subdivision, but to carry that division further? 

Mr. Hill. That would be it. 

Representative Evans. What do you think about that? 

Mr. Hill. I think that is proper. 

The Chairman. I think that anything we can get along that line that is not 
going to entail particular expense should be done. 

Representative Evans. I think the chairman’s idea is correct. If it means 
a small expenditure or not a serious one, if we can get that information we 
ought to get it. 

Tlie Chairman. It seems to be the idea of the committee that if you have 
the figures you may use them to make that showing, provided it does not entail 
any great further amount of labor. 

Mr. Hill. Now, in conclusion I will say that the final result can be illus¬ 
trated through the use of the two separations as above, by statements and 
comments accompanying the same, to set out what the District has cost the 
United States, what the United States has received from the District, and 
what it has cost the District during the period under review. 

The Chairman. Well, it sebnis to me that is a proper summary. 

Representative Hakdy. It is an essential showing; and how much money there 


is on hand. 


IMr. Hill. That absolutely would have to come. 

Representative Hardy. Yes. 

IMr. Hill. It is a question of the balance. 

The Chaieman. Does that cover your suggestions up to this time? 

Mr. Hill. We have one more point that has been discussed among us, but 
not finally agreed upon, and I think it would be well to bring it up. [Reading;] 

“ In the event any money may be, or at any time has been by Congress or 
otherwise, found diie. either legally or morally, from one to the other, on 
account of loans, advancements, or improvements made, upon which interest 
has not been paid by either to the other, then such sums as have been or may 
be found due from one to the other shall be considered as bearing^ interest at 
the rate of 3 per centum per annum from the time when the principal should, 
either legally or morally, have been paid, until actually paid.” 


180 FISCAL DELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


It seemed to be the opinion of some of those in discussion that prol)ahly 
it would be well to have the committee give ns their impressions on tlie com¬ 
putation of that interest; that probably they knew the intent. 

Representative Evans. Will yon be specitic? 

Mr. Hill. Well, some question has arisen as to what would be the basis of 
the computing of that interest. 

Representative Evans. Have you any particular fund in mind? 

Mr. Hill. It would be under the general fund. 

The Chairman. The general fund; yes. The rule set down, as far as I 
have been able to discover by reading some of the reports, was that the bal¬ 
ance found at the end of the year, where there was an amount owing the 
Federal Government by the District, was figured on an annual basis rather 
than from the time the money itself was advanced by the Fedei-al Government: 
the Federal Government having lim'ted the Commissioners of the District 
to the $1.50 rate in taxes on real estate and personal property, and having 
fixed the dates for collection of the taxes, evidently took into consideration 
and recognized the fact that the District would not be in funds at all seasons 
and times of the year, to meet its proportion of the expenditures authorized by 
Congress, and the provision for a charge of interest where the District was 
the debtor—which, by the way, was on a 2 per cent basis when it was charged— 
was from the beginning of the next fiscal year. 

Now, in one case that came to my notice, where there was a balance of, I 
think, about $1,013,000—I am not sure of that figure—growing out of pay¬ 
ments and interest on the 3.65 per cent bonds, the committee finding that 
amount due the Federal Government, based upon a report of auditors, and 
there was a bill reported favorably and Congress passed that bill, making 
it obligatory upon the District of Columbia to repay that money to the Federal 
Treasury, but it expressly waived the payment of interest on that sum. Now, 
that was an indebtedness that was found due, adjusted, and settled by act of 
Congress. It seems to me that that is a closed door. We can not reopen that; 
because the Congress at that time was in position to legislate, and it decided 
that interest on that particular sum should be waived, and I do not think any 
subsequent Congress is going to reopen that particular settlement. 

I would take it that errors discovered, if any, by reason of this audit should 
be adjusted ; that when and as adjusted they would carry interest from the first 
of the fiscal year following the time the money should have been paid, or when 
it was determined the money was due by the District, or vice versa. What is 
your view on that, Mr. Evans? 

Representative Evans. I had not thought about that. I do not know just 
now. It seems to me there will be conditions come where the one rule will 
apply and different conditions will make you apply another rule. The Fetleral 
Government, if it owes the District any money that it ought to have paid, should 
pay from the time that it should have paid the money, regardless of whether 
it is the first of the year or the end of the year. Now. the condition the chair¬ 
man mentions with reference to where there should be appropriations and a 
tax limit, L have not thought considerably about that. I see a good deal of 
force in his remarks. Rut I think, if there should be discovered there a fund 
which does not depend on the collection of taxes, but a fund that was covered 
in to the credit of the District, the interest on that should begin on the time 
the District got the fund. Now, I have not any particular case in mind and 
I would not want, myself, to say just where I would be on that question. 

1 would really like to know the facts before I decided. 

The Chairman. I am really inclined to think that the first business of the 
auditors is to determine what errors actually exist, and with a statement of 
all the circumstances surrounding those, even then this committee would have 
to rule on the question of interest; and even when it rules on the question of 
interest and makes it recommendation, its report to Congress is not neces¬ 
sarily final, because the Congress will express its view on that. It may or 
may not accept the recommendation of the committee. 

Representative Evans. I think your suggestion now is the correct one. 

The Chairman. What do you think about that, Mr. Hardy? 

Representative FIardy. I do not know anything about the"interest quest'on, 
but it looks to me as if it was proper that we should consider this matter after 
we get through with tlie other propositions. 

Representative Wright. I think we will have to get the facts and examine 
the law. 

Mr, Croggon. I think that is correct. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 181 


liepreyoiitafve AVkight. I do not see how we can attempt to rule now. 

Mr. Hodgson. In reply to Air. Evans’s iiapiiry, I would say as to the date of 
the advancinjt, the law would shut that off. The law says “'during the year ”; 
iK^t the first month in the year, l)ut “ during the year.” 

The Chairman. That is my understanding of it. 

Air. Hodgson. And the Comptroller of the Treasury—or at least, the first 
Comptroller of the Treasury—says that you can not charge the District with 
anything that Congress does not say you can charge. It does not make any 
difference how equitable it may he. 

Going hack to your 3.05-bonds disbursement to the Un'ted States, in looking 
over the fiscal affairs of the District of Columbia from 1874 to 1878, I found 
that the United States loaned that very money that you call reimbursed in 
1887; {ind when I was with the Alayes committee I gave them that item, and 
that was identically the money that the District owed in 1874 that is to-day 
“ reiml)ursed ” by ivason of the Alayes report. 

The Chairman. AATll you proceed. Air. Hill? 

Air. Hill. That in general .just comprehends the outline that I had pre¬ 
pared relative to the work. During the course of the work there may be other 
things come .to light whereby we may have to deviate from a line that we 
might establish now, but 1 felt that by using the gross receipts upon the one 
side, and on the other the gross disbursements, that after we had accumulated 
such information we could recapitulate that in any way that was found advis¬ 
able to do it. 

The Chairman. Now. is it your thought that, having audited one or, say, two 
years of the records, you would submit your finding to this committee, so that 
it would have an opportunity to see what was being done, instead of waiting 
until the 11 years had been gone over? 

Air. Hill. AVe are not doing it year by year, and it would not be advisable, 
in my opinion, to take that up. 

The Chairman. The fiscal relations over a year- 

Air. Hill. The length of time, that it would take to take one year at a 
time would overcome any benefit that you might derive by knowing anything 
of any particular year, in my opinion. 

The Chairman. You would think it advisable, then, to go right ahead with 
the data over this period of time, and having in mind always that you can 
have a hearing from this committee on any questions which are in doubt, where 
you think the committee should make a ruling? 

Air. Hill. I think that would be of assistance all around. 

The Chairman. Now, what conditions have you found the records in as to 
their accessibility? 

Air. Hill. AA’e have not gone into that source in any respect. Our work so 
far has been a compilation of the information from statements and books of 
account that are held in the United States Government offices. However, some 
of that includes the reiiorts made by the auditor of the District. AVe found that 
there would he a great deal of saving of time if we could accumulate, first, 
from certain audited reports and prepare an analysis, and then check into, 
you might say, the books of original entry to substantiate such figures. All of 
the statements that we are using have been audited by either one side or the 
other and accepted. As to just what the condition is at the source, I am not 
in position to say. 

The Chairman. You say they were audited by one side or the other. In 
the majority of cases there have certainly been audits by both sides, have 
there not? 

Air. Hill. That is true. I would rather withhold at this time any sugges¬ 
tions or criticisms that we might have in our minds. 

The Chairman. Have you been able to form any estimate in your own mind 
as to tlie length of time it will require you to cover this period in the records 
that you are now engaged on? 

Air. Hill. I felt and do feel now that we can complete within the allotted 
time; tliat was between two and a half and three months. 

The Chairman. Yes. 

Air. Hill. That can be done. 

The Chairman. You are aware of the fact that the law calls for a report 
at a stated time—February 1, 1923? 

Air. Hill. I feel that we can do it in that time. 

The Chairman. Rut I do not quite understand your statement, then. You 
first stated you could come within the time allotted. 





182 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA, 


Mr. Hill. I should iuive made that more clear, that our work in comiectioii 
with this can he completed within two and a half and three months. There 
would probably be some lapse of time between the time of the completion of 
the work and the rendition of the report. Mr. Croggon probably could tell 
you more al)out that than I could. 

Representative Hakdy. We would be rather anxious to have this, so as to 
give the committee anipie time to do its work. 

The Chaiexian. Yes. 

Mr. Hill. It has been our idea to complete the work and have the report 
in the hands of the committee so that they might have it thoroughly digested 
before the time for the report to Congress. 

The Chaikman. Yes, but you are now confining your remarks to the period 
you have to cover, without relation to the earlier years, which you have not 
taken up as yet. 

Mr. Hill. Yes, sir. 

The Chairman. Now how about the question of the expedition of this work? 
Was our estimate of four men the best one, or would you get the best results 
and expedite the work by increasing that number? 

Mr. Hill. I think not. 

The Chairman. But the four men can work without any lost motion, can 
they, on the records? 

Mr. Hill. Yes; I feel so. They have, so far. 

Representative Evans. I want to be sure I am understanding you. Your 
statement, as I understand it, is this, that assuming the balance fixed by the 
1913 report on July 1, 1911, is correct, you can, in two and a half months, 
check up appropriations and expenditures to 1922 and make a rei)ort- 

Mr. Donovan. And revenues, too? 

Representative Evans. Well, just wait. I want to see whether I am right, 

Mr. Hill. Yes; on that basis. 

Representative Evans. Do you intend in that report to include any state¬ 
ments as to revenues other than those that are included in appropriations? 

Mr. Hill. It will include all revenues from different sources within the Dis¬ 
trict in which the District is interested in any way, shajie, or form, wherein 
their activities dovetail, we might say, in with those of the United States 
Government. 

Representative Evans. But which accrued or were paid subsequent to July 
1911? 

Mr. Hill. That is right. 

Representative Evans. And nothing prior to that date? 

Mr. Hill. Nothing prior to July, 1911. 

Mr. Croggon. Unless our instructions are changed. 

Representative Evans. I am not seeking to change the instructions. I am 
just trying to get a clear idea of what his statement means. 

The Chairman. If that is all you have to submit at this moment, I think 
we might give Mr. Croggon fin opportunity. 

Representative Wright. Mr. Chairman, why is the date of July, 1911, fixed 
as the beginning one? 

The Chairman. That I think I can answer very shortly. At the previous 
meeting the question arose through the former audit which was made by the 
Maj’es concern—father and son, I believe—which extended up to July 1, 1911, 
whether or not this committee would accept the findings of that ambt, or a por¬ 
tion of the same, and‘to what extent it could: and Mr. Galbhway hei-e, repre¬ 
senting the Attorney Generars oflice, together with his assoc'ate Mr. Fehr, and 
]Mr. Taggart, have been devoting time and attention to the investigation, or 
inquiring into the vouchers of that audit and report of the Mayes audit, and 
it was thought that we could, nothing being in the way that would interfere 
with the examination of the records, begin with the year 1911 and com.e up to 
date, assuming as a starting point that the findings of the Mayes was correct; 
that Haskins & Sells could proceed with that audit while the conditions sur¬ 
rounding the previous years were under consideration by the legal department; 
and that we are going to bo called upon to consider and reach some conclusion 
on, sometime in the near future, 1 hope. 

Representative Wright. So that this does not ])reclude an investigation back 
of 1911? 

The Chairman. Not at all. Now, the question is to what extent would this 
committee be justified in accepting the report and audit of the Mayes concern 
as being conclusive. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 183 


Uepresentative Wright. I see. 

The Chairman. Are there any other questions from Mr. Hill? If not, Mr. 
Croggon, we would be glad to hear from you. 

Statement of Mr. C. G. Croggon, Manager of Haskins & Seels, Certified 

PuRLic Accountants. 

Mr. Croggon. I have not any remarks to make except as to this general pro¬ 
cedure, and that I think the committee ought to hear, and that is that Mr. Hill 
has been working right with the other accountants, and practically agrees that 
we will not make any change until the various accountants have a hearing on 
it among themselves. They may not agree, but at the same time we will have 
a hearing tirst. 

The Chairman. That is, when any questions arise we are to give them an 
opportunity to express themselves? 

^Ir. Croggon. We are not going to bother this committee with a whole lot of 
little details that we may disagree on. We are coming to you in unison and 
both sides represented. That is about all I wanted to say, and I would add that 
everybody has given us all of the cooperation we could expect up to this 
time. 

The Chairman. And I suppose you agree with Mr. Hill that the force you 
now have employeil is adequate and is the efficient-sized force to get the results 
with? 

IMr. Croggon. I believe if you increased it materially it would be like trying 
to put 50 bricklayers on a 6-foot wall. They could not get around it. 

The Chairman. Am I to understand that you expect to keep in touch more 
or less whenever you are called upon? 

IMr. Croggon. Absolutely; and subject to the call of the committee or Mr. 
Hill or any accountant in the Government service on this particular thing. 

Representative Evans. Suppose a disagreement between you and those who 
represent either the Government of the District; suppose you meet and have 
a conference and they convince you that your position is wrong and you assume 
theirs. Will the committee have any notice of that fact? 

IMr. Croggon. No ; not if they convince us that we are wrong. That is what 
I am trying to keep from the committee, because there are going to be lots of 
little things where we will have to say that we are wrong, and they will have 
to say that they are wrong in places. But if they do not agree, you will get 
both sides of the report. I think that is fair to the gentlemen representing the 
various departments of the Government. 

IMr. Galloway. You mean if you do not ultimately agree? 

Mr. Croggon. Yes. Of course, if we agree on a thing, there is no question 
involved. 

Representative Evans. That refers simply to a fact—not to a legal con¬ 
clusion? 

Mr. Croggon. No, sir; we are not going to pass on legal questions. Account¬ 
ing, for the most part, is a known science, but the best accountants disagree at 
times; and when we do disagree, instead of making a report and having the 
other side come in and say, “We do not like the report,” as has been the case 
in regard to other reports, we are going to get them Jiltogether on record as 
agreeing before we come to this committee. 

The Chairman. But that will be C(»nfined to questions of accounting? 

IMr. Croggon. Absolutely. We do not feel that we are qualified to pass on 
the other questions. 

The Chairman. Is there anything else? 

Rei)resentative AVright. AAliat we want are the facts. AA'e will have the law. 

The Chairman. If you have nothing further to offer, we will take the next 
witness. Mr. Donovan, you represent the District. Have you anything to say 
at this time? 

Statement of Daniel J. Donovan, Auditor of the District of Columria. 

Mr. Donovan. I lune nothing to say but this, Mr. ('hairman: I have gone 
over this subject fully, as you know, at previous meetings of the committee. I 
am in practically daily contact with the accountants—Air. Hill and his as¬ 
sistants—and we have an agreement to this effect, that where any quest.on 
arises, as Air. Croggon has just stated, where there is difference of opinion as 
to certain entries on the record, before a conclusion is drawn I will have the 


184 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


opRortniiity, as representiiij? the District, to come in conference with them on 
the question. 

Tile CiTAiiiMAN. Yes. 

INIr. Donovan. The chairman has knowledge of the fact that the accountants 
are up against work somewhat different from what they ordinarily have. Com¬ 
mercial hookkeeping and governmental bookkeeping are signiffcantly different 
propositions. But I want to say, Mr, Chairman, that I like the fjiir way the 
District is being treated by the committee in this investigation as the District’s 
i-epresentathe to he given the opportunity to appear before the committee and 
present their views regarding any matter which they may v.'ish to question in 
the accountants’ report. In the previous fiscal investigation conducted by the 
House committee we were not permitted to participate in the audit at all; but 
we are going to participate in this one, and we are going to he in position to 
pi'ove absolutely to the satisfaction of this committee when we are through that 
we have some $5,000,0(X) of surplus revenue in the Treasury. 

The Chairman. In case a question arises \vliere the auditors find something 
that they think the Comptroller General’s office has been wrong on, and, for 
instance, they call in Mr. Taggart, you do not expect them to settle with IMr. 
Taggart without your being heard? 

IMr, Donovan. No ; the conference is to be between all the parties concerned, 
representing this committee, the United States, and the District of Columbia. 

The Chairman. Is that to be every time; when a question arises both sides 
must be represented in the conference? 

IMr. Donovan. Yes, sir. 

Mr. Croggon. I have done a good bit of city work, and I know the differences 
that come up. If we can iron out the petty differences before it goes to the 
rest, we have done some good work. If we can not iron them out, both sides 
are entitled to a fair hearing; and while we may disagree with them, we want 
to give them the benefit of what we think on the matter. Possibly we will be 
in position to argue it before this committee. 

The Chairman. Have you anything further, Mr. Donovan? 

Mr. Donovan. Nothing further. 

The Chairman. Mr. Taggart, have you anything to say? 

Mr. Taggart. I do not believe I have anything at all. 

The Chairman. Mr. Hodgson? 

Mr. Hodgson. No, sir. 

The Chairman. Mr. Galloway, we would like to hear from you. 

Statement of Mr. Herman J. Galloway. 

Mr. Galloway. One thing that has been worying us especially—not on this 
line, however, that has been discussed here alread ythis morning—is the con¬ 
dition of the fiscal relations between the years 1874 and 1878. 

The Chairman. Yes. 

Mr. Galloway (continuing). And the condition of accounts or audits which 
may have been made covering that period. 

I find that the Mayes report purports to cove rthe appropriations and 
advances made by the United States to the District of Columbia from June 
20. 1874, to June 30, 1878, inclusive, which affect the account between the United 
States and the District of Columbia except those advances made by the United 
States Treasury for the payment of the interest on the 3.65 bonds of the Dis¬ 
trict of Columbia prior to June 11, 1878 [reading] : 

“ The report filed by us with you on February 15, 1913, fully considers those 
advances, except as to the interest thereon.” 

In other words, their report covers one side of the picture, namely, any 
claims of credits that may be due to the United States of America from 
the District; but there is nothing in the statement here which shows that 
they have considered in any way anything which may be due from the 
United! States to the District. There is no account or audit made of the 
revenues of the District which were taken over in that period. 

Then the question arises whether or not any such thing is necessary. 
During that time the revenues of the District were collected and perhaps 
were not covered into the Treasury; but at least they were deposited with 
the Treasurer of the United States and were then expended upon warrants 
drawn by the commissioners; and it appears that, if there was any deficiency 
the United States had to make it up. 


FISCAL RELu\TTONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 185 


As a practical matter wo can not know wliether there were any deticiencies. 
oi whethei there was a sni*pliis of tliose District revenues after taking care 
^t the District expenses. 

purports to cover any advances that the Govern- 
do not have any reports which cover any surplus 
That, briefly, is tlie situation, as I liave been able 


This examination liere 
nient has made, but we 
of the District revenues, 
to determine the thing. 

My own notion is that 
of the District revenues. 


the 
was not 


on 


from a practical standi)oint thei'e were no surpluses 
but that the deficiencies were all the other way: 
but I am not prepared to determine that. 

Ihe Chaikvian. The fact that certain amounts were appropriated by 
Government would indicate that there were deficiencies—that there 
a sufficient amount to meet the needs of the District. 

But, first, let us clear the atmosphere a little. Beginning with the fiscal 
year of 1878. the Government undertook to furnish 50 per cent of the require¬ 
ments of expenditures in the District. Now. I confess that I am not dear 
in my own mind as to the legal status that pertains during tliose previous 
years, beginning with the fiscal year of 1874; whether the PTaleral Govern¬ 
ment put itself in the position of collecting all revenues, taking charge of 
them, paying all obligations, and supplying (uit of the P^ederal Treasury the 
amount necessary as between the receipts of the District and the totixl ex¬ 
penditures of the District. What is the law on that? I am not clear 

the law. 

Mr. Galloway. Have you the Eighteenth Statutes at Large here? The 
law on that, Senator^—and there is a great mass of it—is this, as I under¬ 
stand it, that these revenues were collected, and that they were used so far 

as they would go for the payment of the expenses and costs of the District 

government; and that appropriat'ons were made by Congress in relation to 
that, for the carrying on of certain things which were necesssary to the 
running of the District government. But there was no apportionment of 
those appropriations between the District and the Federal Governments, be¬ 
cause the District’s revenues had all been used up in other matters. 

The Chairman. There was no np-.lO prior to 1878? 

Mr. Galloway. No. 

The Chairman. Now. it can (oily be determined by the laws of that time— 
of course, appropriation bills lieing considered laws- 

Mr. Galloway. Yes. 

The Chairman. Whether the appropriations ma<le by the Federal Government 
to the District were properly considered as contriluitions on the part of the 
Federal Government to the District, or whether they were advancements in the 
form of loans—it seems to me that in the handling of that 3.65 bond interest 
matter, it was treated as an advancement. I think this committee wants to 
know whether that was correct or not. 

Mr, Galloway. The bond proposition is an entirely separate thing. 

The Chairman. Yes; because that was accumulated indebtedness prior to 
1874. 

Mr. Galloway. Yes; and this that we are thinking of and speak ng of now 
is only the current running expenses of the District during that time. 

The Chairman. Yes. 

Mr, Galloway'. Now. I will .iust rea<l you an example of that—what went 
with the District funds during that period. Here is the application of the 
moneys collected, in the law of 1874. T read from Eighteenth Statute at Tairge, 
page 117; 

“Which said taxes shall become due and payable on the 1st day of Novem¬ 
ber, 1874, and, if not paid, shall be in arrears and delinquent from that date: 
and shall, except as herein modified, be assessed and collected as now prov ded 
by law for the assessment and collection of general taxes for the District of 
Columbia; and of the sums so collected, one-fourth thereof shall be applied, 
first, to reimburse tlie United States for its advances on account of interest; 
which shall have been paid by the United States on the funded debt of the 
District of Columb’a and Washington and Georgetown, due and payable 
July 1. 1874; and the remainder shall l)e used to pay deficiencies in the various 
funds for the fiscal year ending June 30. 1874. And all the remainder of said 
taxes not re(iuired for the aforesaid purposes shall l)e distributeil for the ])ur- 
poses and iu the proportions provided by tlie act of the T.egislative Assiunbly 
of the District of Columbia, approved June 26, 1873.” 


32894—S. Doc. 301.67-4- 


V > 





186 FISCAL RP:LATI()NS BETWEP:X U. S. and DISTRU'T of columbta. 


In Ollier words, tliere it makes a lull disposition of all ol the taxes and 
revenues of the District of Colunihia. 

Now, it jtoes ahead and makes ap]iropriation for tlu' i>a.vm(‘nt of ollu'r runnin;; 
expenses of the District, so that, where is there anythiinj left to audit there? 

Mr. Hodgson. Mr. Chairman, for the information of the comniittee I would 
say that the law provided durin<? that period which you have umhu* consider¬ 
ation, that the moneys should be deposited in the treasury and drawn therefrom 
on warrants of the commissioners. As a matter of fact, that law could not he 
complied with. As a matter of fact, that money never did jro into the Treasury, 
It went into the hands of the Treasurer of the United States as a cash account, 
and was checked apiinst by the commissioners to pay the ordinary expemlitures 
of the District at that t ine. And, in connection with the tax rate, the law 
required that a certain pei‘ cent of each tax rate should he devoted to a cer¬ 
tain activity, and for no other imi’iiose; hut. in investipitinjt that matter the 
Mayes committee went into it vei'y fully and showi'd that that had not been 
comi*lied with; that that was purely District money. 

Mr. (Jalloway. You mean the 25 pei' cent that was to he set as'de- 

Mr. Hodgson. No; 1 mean the certa n iier cent of taxes allotted, "i'wenty 
per cent would he set aside for schools. 5 cent for this and 10 per <*(‘nt for 
that and 5 per cent for the other, until they usial up the (Uitirc^ 100 jier cent. 

Ml-. Galloway. That was in the leftislative act of the District of Uolumhia. 

Mr. Hodgson. Y"es. 

Mr. Galloway, That was used for whatever they ph>as(Ml? Tluu-i* was no 
account in the dishursinjr otlice for the dishursenient of that money? 

The Chairman. That would not affect th(‘account between the T'nited States 
and the District of Columbia. 

Mr. Hodgson. No; T am just ^iviiijr you that information, that the law 
specifically required that the revenues of the District of Columbia should 
be deposited in the Treasury. They did not do it, because if the mone.v had 
been deposited there, they would have had to have an approjiriation of Con¬ 
gress to ^et it out; so that, therefore, they adoitted the expedient of makiiijr 
the Treasurer of the United States himself, in his position, a treasurer of 
their fund, and they would check against it with their own wari-ants. 

Mr. Galloway. But they used uj) their own money. 

Mr. Hodgson. Y"es; there was a little bit left in 1<S7S. They did have a little 
balance in that year. I think probably between $4.0(10 and $5,(M10, that went 
into the property fund. They had that left over for the fiscal year 1S7S. 

The Chairman. During those years from 1874 to 1878. what approi>riations 
were made by the Federal Government for the juirposes of tlu‘ Distri(-t of 
Columbia? 

Mr. Hodgson. They made appropriations and loaned the District money 
aside from the appropriations. 

The Chairman. That was princiiially for schools? 

Mr. Donovan. Schools and iiolice. 

Mr. Hodgson. Y^es; for schools and police force. 

The Chairman. Tliere were two items of $75,000 each. 

Mr. Hodgson. Y^es. 

Mr. Gagloway. They reipiired that amount of money to be i-eimbursed; 
but they did not do it until 1011 or 1012. 

The Chairman. What appropriations did tlu' Government make during those 
years, for meeting the current expenditures? 

Mr. Hodgson. None. 

The Chairman. They allowed the District to make its own 
and anything that was advanced, they advanced in the form of 
repaid? 

Mr. Hodgson. Y"es; 

Mr. Donovan. No; Ylr. Hodgson is wrong on that point. 

Mr. Gallom'ay. There were appropriations in that period. 

Mr. Hodgson. By the legislature? 

Mr. Gallowayx No; during the years 1874 to 1878 there were approjiriations 
from the Fedei-al funds for things that are purely, or at least are now recog- 
niz(‘d as partially District uiattei-s. T think Ylr. Donovan will bear me out 
in that. 

Mr. Donovan. Y>s; there were contributions by the United States to meet 
local expenses during those years. The chairman will recall that the act of 
June 20, 1874, provided for the temporary commission form of government 
between 1874 and 1878, and also provided for a joint committee of Congress- 

The Chairman. Y>s ; T remember that. 


obligations, 
loans to be 


or gifts. 



rJSCAL RELATIONS BETWEEN U. S. AND DISTRTCJT OF (.’OLUAIBIA. 187 


Mr. Donovan. To devise a stable form of government for the District, ami 
to report to (Congress what would be a fair proportion of the exi>enses to be 
paid from the revenues of the District and by the Ignited States (JoverniiKMit. 
respectively, in city maintenance and capital development. 

In J(S74 the District was bankrupt That was following the territorial form 
of government, when our debt was increased from .$r).(>0(>,(K10 for the three city 
('orporations, to $27,00(),(KK). 

While the (longress was considering a permanent form of government to 
(‘stablisli in tlie District of Columbia (which \vas established "by tiie act of 
.lune 11, 1S78), within the period between 1874 and 1878 Congress tlid appro¬ 
priate a sum of money, about $1,400,0(X), for each of those years, toward 
assisting the municipality in paying certain expenses. Congress providing in 
the appropriations that the money should be available, so much for the 
schools, so much for the police, and so on. But such appropiaations wei'e nor 
loans to the District. 

Representative Evans. When that was done, was that money turned over 
to be expended l>y the commissioners, or in what way was it expended? 

Mr. Donovan. On warrants of the commissioners. 

Representative Evans. Directed to the Treasurer of the United States? 

Mr. Donovan. Yes. sir. Now, it is true that during the period between 
1874 and 1878, in addition to the lump-sum contributions or appropriation. 
Congress did also make certain loans to assist the District in paying its 
interest on the funded debt, to ei’ect school buildings, and to do certain other 
things, and those moneys- 

Mr. Galloway. Are covered in the Mayes report? 

Mr. Donovan. Yes: they are covered in the Mayes investigation conducted 
by the House committee. As a result of that invc^stigation the entire period 
i.'f. 1874 to 1878 has been fully and completely covered, and there is nothing 
left in that period for further investigation. 

Mr. Galloway. The only question I can see there is this: I (*an not see 
any opportunity for anything to exist that has not already been covered by 
the auditors that would be in favor of the United States Government, but 
there might be something that is in favor of the District of Columbia, because 
the Mayes account does not purport to cover the District’s side of the story 
between those years. Now, as a practical matter, I do not believe there is 
any tiling there, but I can not say. 

The Chatkman. In your examination of the various laws and appropriation 
acts, have you made an alistract of those? 

Mr. Galloway. We are making an abstract now. 

4'he Chairman. Which would serve as a basis for the guidance of the 
auditors in case it was determined that the records of those years should be 
examimal? 

Mr. Galloway. Yes. AVhat we are doing. Senator, is to take all the acts 
referring to appropriations or affecting the fiscal relations, and if an act is 
very important and short we are making a copy of it, otherwise we are 
abstracting it. Then in some instances where it refers to appropriations for 
certain things we say, “ Appropriation for such and such a thing.” That is 
quite a job, you know, to do that. 

The Chairman. We bave rather concluded—I think it was the consensus 
of oi)inion anion«g the members of the committee—that in any event we would 
want to give consideration to the activities of those years; that perhaps it 
would nut be found necessary t(^ actually audit the accounts, but, having refer- 
mice to those audits tliat have been made, in the light of the legislation that 
was passed from time to time, we could determine whether or not the audit 
sliould be acceiited. It is rather complicated. 

Mr. Gallom’ay. As something: that would facilitate your conclusion on that, 
I think Mr. Donovan would be perfectly willing to concede, on behalf of the 
District government, that they liave no claim on the Government for any 
money during that period. 

The (bi AIRMAN. BetM’een 1874 aixl 1878? 

Ml*. Gali.oway. Yes. 

Mr. Donovan. I have already stated to the chairman that I believed that 
particulai- period was a dead issue at this time. 

The Chairman. The i>oint I am trying to make is that this committee will 
have to liave a suffu'ient basis on which to reach a conclusion that it is unneces- 
sarv to reaudit the accounts of tliose years. 



188 


I-TSCAI. KEI^ATIONS BETWEEN 


U. S. AND DLSTRTC^T OF COLUMBrA. 


INIr. Galloway. My reason for stating that is that tlie statement of the rei)r(‘- 
sentatives of tiie District that they have no claim is one side of the matter, ami 
the bringing in of the ^Mayes report gives the othei* side, so that yon will have 
both sides of the story, if you wish that. 

The CiiAiKMAN. Tliat would embrace not only h‘^74 to 187S hut would carry 
it on to 1911. 

Mr. (tJalloway. That is, the Mayes report? 

4Tie Ghaiuman. Yes. 

Mr. Galloway'. But the Mayes rejmrt from 1871 to 1878 covers both sides of 
tlie story. 

Mr. Donovan. No; it does not. 

Mr. Galloway. It purports to. 

The Ghaikman. W(* will have to satisfy our.selves as to whether it does or 
does not. 

Representative Wumirr. What we want is an abstract of the laws for that 
period, and then from that we will determine whether we should go into that 
or not. 

The Ghairman. Have you anything further? 

^Ir. Galloway'. I do not think so. 

Mr. Donovan. Of course there is one point that is apt to be hroiight before 
this committee regarding the period between 1874 and 1878. I mean to say that 
if the committee intends to permit the api)eai‘ance of persons claiming to rei)re- 
sent the citizens of the District and certain organizations, the contention is going 
to he made that the reimbursements to the United States, about a million dollars 
or more, coveiung the period betxA een 1874 and 1878, which reimbursements were 
made within the past fe^v years, slioidd be credited back to the Distinct. After 
the lai)se of 40 years or more it would seem the District should not have been 
called upon at such late date to make repayuient, as in passing the act of 1878 
it is reasonable to presume the Gongress considered all those matters, with the 
result that all claims against the District prior to 1878 became res adjudicata. 
In my oi)inion there is much merit to such a contention, and it is one that 
deserves the serious consideration of the committee. 

Mr. Galloway. Does the doctrine of res adjudicata apply against the United 
States of America? 

Mv. Donovan. No: but I say that such a contention is apt to be made, that 
the District after the lapse of all those years, and ])articularly after the passage 
of the act of 1878, should not have been called ui)on to repay to the United 
States loans made to the District prior to 1878. 

The (-hairman. But they will naturally raise the point of the efpntable .set¬ 
tlement, and Ave are, under the law, charged with the responsibility of consid¬ 
ering the equities. 

Mr. Donovan. Yes; and in my opinion the e(inities should be considered, and 
on both sides. 

The Ghairyian. Has anyone anything further to suggest, or have we covered 
<‘verything that is necessary to be handled this morning? If there is nothing 
else, we will adjourn subject to call. 

(Thereupon, at 1.30 o’clock p. in., the committee adjourned subject to the call 
of the chairman.) 


FISCAL RELATIONS BETWEEN THE UNITED STATES AND THE 

DISTRICT OF COLUMBIA. 


Friday, Decemher 1, 1022. 

I 1h‘ .joint select coniinittee met, pursuant to notice, at 2.30 o’clock p. in., in 
tile room of the Cknnmittee on the District of Folumhia in the Capitol, Senator 
Lawrence C. Phipps presiding. 

lieseiit. Senators Phi[)ps (chairman), Pall, and Harris, and Representatives 
Evans, Hard.v of Colorado, and Wright. 

There appeared before the committee Mr. Herman .1. Calloway and Mr. Joseph 
C. Fehr, representing the Department of Justice; Mr. C. C. Croggon and Mr. 
P. F. Hill, representing Haskins & Sells, certitied fiublic accountants; Mr. Daniel 
J. Donovan, auditor of the District of Columhia ; and ]Mr. Earl Taggart, repre- 
smiting the Ceneral Accounting Office. 

The Chairman. The committee will please come to order. First, 1 would 
like to say that during the recess of (Congress I had a communication from 
the auditors, Messrs. Haskins & Sells, in which they informed me that in order 
to check up some of the accounts for the period from 1911 to 1922 it would be 
necessary to go back into the earlier a(*counts, because of their intimate rela¬ 
tion and overlapping, and they wired me on October 31; I received that tele¬ 
gram on Xovember 1, and I told them to go ahead; and then I wrote them under 
date of November 3, when I got back and rea<l tlie full text of their tele.gram. 
In the meantime I had seen (Congressman Hardy. 

For your information I will read their telegram and my telegram and letter, 
with their reply. Their telegram of October 31 reads as follows: 


October 31, 1922. 

Senator Lawrence C. Phipps, 

Chairman Joint Select Committee Appointed to 

Investigate Fiscal Affairs of the District of Columbia, Denver, Colo.: 
('kmtinued necessity for consideration of items jirior to 1911 in our work sub¬ 
sequent to that year leads us to suggest that our engagement be enhi.i‘ged to 
comin*ehend the full period referred to in the act creating your committee, 
thereby avoiding duplication of work. Please wire reply. 

Haskins & Seij.s. 

My rei)ly to that was as follows: 

Denver, Ooi.o., November /. 

Messrs. Haskins & Seles, ' 

Baltimore, Md.: 


Satisfactory for .vou to proceed with investi.gation prior to 1911 
your telegram and provided by law. 


TvA WHENCE 


suggestiHi in 
(’. Piiiees. 


'riien in my letter, dated November 3. I said to these .gentlemen, as follows: 


Denver, (’olo., November ,i, 11122. 

M(‘ssrs. Haskins & Sells, 

Baltimore, Md, 

Dear Sirs: During my absence on a trip through the State your telegram of 
October 31 was received at my office and read to me over the telephone, and in 
resi)onse T authorized a telegram in reply saying that it \vould be satisfactory 
for you to proceed with the investigation of the records prior to the year 1911. 

I have since that time had an opportunity to confer with Congressman Hardy, 
one of the members of the special committee, and also to read your telegram 
in the full text as transmitted. 

It seems to us that until we can have a meeting of the entire conimittei* when 
Congress reconvenes we should not assume the responsibility of authorizing you 
to examine all of the records for the period of time prior to 1911 referred to in 
the act creating the committee, but I am personally willing to authorize .vou to 
continue wmrking on those records until we can have a meeting of our committee 
on the understanding that you will confine your labors in so far as possible to 


189 



190 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COIALMBIA. 


tlie character of work which will enable you to solve the problems which have 
arisen in your inspection of the records for the year 1911 and later years. 

Trusting that this authorization will cover what you refiuire, and appreciating 
your interest in the work. 

Yours very truly, 

Lawrence O. Phipps. 


That was acknowledged by them under date of November 7, as follows; 


November 7, 1922. 


Hon. Lawrence G. Phipps, 

Chairman of the Joint t^elect Committee Appointed to 

Investi<jate Fiseal Affairs of the District of Columbia, Denver, Colo. 

Dear Sir: This office is in receipt of your letter dated November 3, 1922, rela* 
tive to our audit of the records of the District of Columbia. 

This letter has been carefully noted and a copy thereof sent to our accountant 
in charge at Washington. 

Please accept our thanks for this letter. 

Yours very truly, 


Haskins & Sells. 


Tliut is all of the correspondence that 1 had on the subject. IMr. Hill is present 
for Haskins & Sells. I might ask him to state what the present situation as to 
progress is, and what the outlook is, so that we can reach an understanding as 
to the next steps that apparently are necessary. 

Statement of Mr. P>. F. Hill (Kesumed). 

Mr. Hill. Mr. Chairman, that is pretty well covered in our preliminary report. 

The Chairman. That report, I think, has now been in the hands of the mem¬ 
bers of the committee, with the exception of Congressman Evans and Congress¬ 
man Wright. I have been passing it around, and have not gotten it back from 
the latest man until Just a short time ago. The report is rather lengthy, and 
I hardly think it necessary to incorporate it in the record at this point unless 
the committee considers that advisable. I had thought that the members would 
probably get more out of it by personal study. Will you Just state briefly what 
the progress of your work is? 

Mr. Croggon. You want a summarization of the report? 

The Chairman. Yes. 

Mr. Hill. We are working now with a view of closing up the period from • 
1911 to 1922, with a view of reporting on it, and referring to those instances 
which we think are pertinent, occurring prior to 1911. 

The Chairman. How long do you anticipate it will take you to have that 
report in the hands of this committee? I think you said about three weeks. 

Mr. Hill. About three weeks. 

The Chairman. From November 20? 

Mr. Hill. It may take us a little longer than that. It may take us four weeks. 

Mr. Croggon. About December 20? 

Mr. Hill. Yes. 

Mr. Croggon. I figure between December 15 and 20. 

The Chairman. If we could have it by December 15, that would give us an 
opportunity to digest it and go over things. It is going to be the 20th 
before we get it, you know some of us are apt to go away for the Christmas 
holidays shortly thereafter, and we are all very busy at that time. A saving 
of a week would make a great difference. 

Mr. Croggon. Mr. Hill, do you think you could have it within two weeks? 

Mr. Hill. I do not think so. We would have to say, then, after the first of the 
.vear. 

The Chairman. You could have it to us by the 20th of December, could 
you? 

Mr. Hill. I will not say positivel.v ; no. sir. In one instnnce W(‘ are waiting 
on certain information from the Treasury Department. I do not know Just bow 
much work w'e will have to do after we do get that information. 

Senator Ball. Mr. Chairman, when will the appropriation bill for the Dis¬ 
trict of Columbia lu’obably be in the hands of the House committee? 

The Chatrman. It should be in the hands of the House committee within 
the next two weeks, I should think. It was so last year. I have not heard 
what progress has been made on the District appropr’ation b'll this year. 

Representative Evans. Mr. Donovan can probably tell you what that situa¬ 
tion is. 


I'lSCAL KEI.AT10NS BETWEEN IT. 


S. AND DISTUU^T OF COEUMBIA. 


191 


Ml Donovan. It has been siihnhtted, and I understand IToin Mr. Sliields, 
I lie tdei-k ot the House (’oininittee on Appropriations, that the hearings on the 
hill wdl (•onmienee hefiire the snhconnnittee of the House eoniin ttee on Dec-eni- 
hei l.». I hat is tin' tinu' I expect I will have to he before the House corn- 
inittee. I know that the budget has been completed and submitted' at least 
it has gone to the Public Printer. 

lk.epiesentative Kvans. Do you know when it will be submitted? 

Mr. Donovan. I understand that the hill is now in the hands of the Public 
Drinter. 

1 he Dhaihaian. Me* are called upon for a report bv the 1st of Februarv- 

Senator Ball. Yes. 

The Chairman. We would have to make our first report bv that time, at 
the latest. 

Mr. Hill, you have said you are now waiting for certain information from 
the Treasury Department; how much does that involve in the wa.v of work; 
I mean to what extent would it affect your report? (%mld you make a report, 
leaving that as an unsettled item, for instance? ' < 

Mr. Hill. Yes; that is all right; but I would rather not hold myself down 
to December lo to be able to complete that subseipient to 1911, for 1 am afraid 
1 can not do it. 

The Chairman. I think what the committee would like would be to have 


copies (^f that report in the possession of each member before the Christmas 
holidays, and to give you some information as to the continuance of your work, 
before adjournment for the Christmas holidays, so that there would not be 
any time lost in your going ahead. 

Mr. Croggon. We are working on an uncertain problem. We will try to 
get it to you by the loth. If it is imssible, we will do it. None of us (*an look 
into the future. It may be jnjssible. 


Senator Ball. Are those problems such that they will involve .vour report? 
I mean by that, the status of conditions from 1911 up to the present time; 
of merely finding out the different origins of the balances previous to that 
time. 

Mr. Hill. It affects prior to 1911, and would affect the balances. 

The Chairman. What you are trying to arrive at is the balance as of the 
1st of July, 1911? 

INIr. Hill. No, sir; we were trying to arrive at a balance as of July 1, 1922. 

The Chairaian. Of course that is the end to be attained ; but in order to 
aim at that, you want your starting point. 

Senator Ball. As I understood, in resi)ect to completing that rej^ort there 
were some difficulties in accpiiring definite knowledge as to your balance previ¬ 
ous to 1911. Thei'e were certain ledgers that you had not been able to see at 
that time. 

Mr. Croggon. The.y probably affect the ending period too. In other words, 
the creation of the account would refiect on the conditions either at 1911 or 
1922, being uncertain at both times until we can locate that information. 

The Chairaian. Well, at one of our earlier meetings we determine<l to try to 
check the accounts for the jiast 11 years, before going into the earlier years, 
with a view to the i)ossibility (ff reviewing and accepting, with such changes as 
might be necessary, the rei)orts that had been made in previous audits. Now, 
have you bad any reason to change your mind as to the feasibility of that 
plan ? 

^Ir. Hij.l. No; 1 think not. 

The (’hairman. Have you any idea how much work is involved, assuming 
that you couhl adjust your balances as of July 1. 1911, and of July 1, 1922; 
how much time would be recpiired for work on the accounts of i)revious years, 
so that you would Ite in i>osition to say that you believed they had been properly 
audited ? 

Mr. Hill. Aftei- making an estimate here in the beginning, before we went 
into the work, of three months and then finding conditions as we have since 
that time 1 have hesitated ever since of expressing an opinion as to the time, 
because I did not want to fool anybody or myself either. But I think it would 
require about four months at least to take ui> the iieriod prior to 1911. 

The (’HAiRAi AN. Is it your judgment that it is going to be absolutely necessary 
to exi)end four months, or some such period of time, in the investigation of 
those accounts? 

.Mr. Hd.i.. I «piestion whether it will be necessary. 


192 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLl^MBTA. 


The CnAiHAiAN. You think there is a probability that the eominittee iiiij^ht 
he justitied in aeeeptinji the records as they stand with- 

Mr. Hinn. Witli inoditicatioiis up to 1922, 

The Chairman. Yes. 

Mr. Crogoon. That is wliy we asked to go hack of that time; is that right? 

Ml-. Hill. That is right. What we had in mind was this: There was a 
c-ertain fact to be established at the end as to a lialance, and then there was to 
be an examination for certain of that interim period as between 1911 and 1922, 
and that between 1874 and 1911 ; and that between 1874 and 1911 had already 
been accomplished. 

But the fact as to the status of the District of (volumbia and the United 
States (lovernment at the beginning apparently never had been considered. 
What we thought was: If we could give you the status at thd beginning,, with 
the facts that had been brought out in the interim, and then the balance at the 
end, then) this committee would have something to work on in its consideration 
of the matter. 

Senator Ball. You mean the facts at the beginning as to 1878? That was 
the beginning of the tinancial union between the Government and the District. 

Mr. Croggon. At the beginning; it should be under consideration at the end. 

Senator Ball. You are not considering from 1874 to 1878? 

Mr. Hill. I think we ought to; that is, to take the status, what it was at 
both times. 

Senator Ball. Ybiu think you ought to go back to 1874? 

The Chairman. That date, 1874, is stated in the act creating this siiecial 
committee. 

Mr. Hill. 1878 creeps in because that was the date of the organic act. 

Senator Ball. He says there is just as much question as to the status of the 
financial relations between 1874 and 1878 as there is concerning the i>eriod 
afterwards. 

The Chairman. Now, first, to keep the record straight: Is the committee 
satisfied that the communication we sent to the auditors M as the proper one to 
make at the time, as to the manner in which they should proceed until we 
could get together? 

Senator Ball. Personally, Mr. Chairman, 1 feel that I would like this com¬ 
mittee to be able to make a complete and definite report on the whole propo¬ 
sition. Whether we have authority and time to do it at present or not, I do 
not know, but that is what should be done; there is no question about that in 
my mind. 

The Chairman. What 1 was asking first. Senator, was as to the action taken 
here in these communications. I wanted to clear that up, if it M\as all right to 
authorize these auditors to go back into the former years—for them to proceed 
with that work until the committee could get together and tell them exactly 
what to do. 

Senator Ball. Y^'es. 

Bepi-esentative Evans. I move that the action of the chairman M’ith refer¬ 
ence to the communications referretl to in answer to the telegram from the 
auditors be approved. 

Senator Harris. I second the motion. 

(The question Mas taken and the motion M’as imanimously agreed to. ) 

The Chairman. Yery M-ell ; it is unanimous. 

XoM', as to the other, Senator Ball, the committee M'anted to determine 
M-hether or not it Mould be ne<*essary to again perform tbe physical clerical 
Mork of actually auditing the accounts for those years prior to 1911, in vieM' 
of the fact that they had been iireviously audited; and that is the question 
that 1 take, it is still open. We decided that M-e had best defer Judgment on 
that until the auditors got into the accounts and became familiar Muth them 
and could form an understanding of hoM- the accounts had been kept and 
iKw the records had been checked; and in their report to this committee 1 
think Me M’ould like to have them say M’hether in their judgment it is nec- 
essai-y to diqilicate that physical hd)or; or M’hether, the records having been 
checked and brought together as betM’een the tM’o sides, they could be accepted 
as having been properly audited. 

Senator Ball. I think that is a perfectly clear, correct statement of my feel¬ 
ing in connection with the situation. I read that preliminary report hurriedly, 
only once. There are many statements in that preliminary report M’hich M'ouid 
lead me to think that the present auditing committee was not clear in their 
minds as to the origin of certain of those accounts; that there seemed to be 



nSCAI. REI.AT1()NS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 193 


some one ledger, at least, to 
tain Balances wliicli did not a 
all that matter was settled By 
accounts find that the last audit 
whole thing had Better Be settled 
Keiu-esentative 
ask the auditors 


which it 
gree with 


referred that could not l)e found—cer- 
tlie different departments. Now, unless 
the last audit and you in going over the 
proB{d)ly does clear it up. then I think the 
That is my feeling. 

Hardy of Colorado. Now, Senator, would it Be feasible to 
to consider these former audits of those years from 1874 to 
1911 and give us a brief summary of what those audits show, without going 
into the details of every addition and suBtraction and extraction, and give 
us a sort of a summary of it and let us see if then' are any detailed points, 
and if so that those Be traced to their source, and let us have something Before 
us to connect up with this report? Would that Be feasible? 

Mr. Croggon. That is what we have in mind. • 

Representative Hardy' of Colorado. If you had something like that so that 
we could just accept what is satisfactory after glancing at these summaries, 
it seems to me that will settle the whole business and give us the prestige of 
having gone into the whole Business foi- the Thiited States, at least. 

Mr. Croggon. What we had in mind was to submit for your consideration a 
completed report for the peri(»d from 1911 to 1922. That was what we were 
engaged to do and what we want to finish. Now, in doing that there will Be 
certain items which will have certain imints in them that are not entirely 
clear. Now, if the committee, in its discretion, wants those ix)ints cleared up, 
we should Be able to do it, and we would Be glad to go all the way Back, if 
you think so. Now, as to time and expense, probably we can save Both, But 
we would like to complete what we were engaged to do and put it Before the 
committee, and whatever ])oints were rai.sed, if it raises any additional points, 
we would take them up, and in that connection I would like to have the privi¬ 


lege of sending to each member of the committee one 


of those 
the time. 


reports. I 


wanted to do that. But we did not want it to get out until 

The Chairman. We would Be glad to have them. 

Mr. Croggon. Then, if any points are raised after finishing the reiiort, they 
cam lie taken up; and when any items are not done with respect to the previous 
report, that can Be done. I think some items will justify further investigation. 
I think the majority of them will not, hecause they are routine. 

Senator Harris. What auditor was it that conducted this other investiga¬ 
tion, up to 1911? 

The Chairman. The Mayes, father and son. 

Representative Hardy- of Colorado. They took three or four years to go all 
over it. 

The Chairman. They spent about four years’ time on the accounts. Then 
they were followed By IMr, Spalding. Did you find what you call the working 
figures of those auditors any place? Did you find the working jnipers or 
records that had Been made By Mayes or Spalding? 

Mr. Hill. I took that ciuestion up with the younger Mr. Mayes. He came 
to see me in the old Land Office Building and told me that his work papers 
were stored down in this (*onimittee room here where we are sitting upon the 
completion of their work. 

Mr. Donovan. In the House committee? 

Mr. Hill. No; he told me in this c'ornmittee room here. 

The Chairman. They could not have Been with the Senate committee. The 
House ordered the investigation. 

Mr. Hill, He told me they were stored in this Senate District of Columbia 
Committee room where we are sitting here. He said that he came several 
years ago to get some of those work ]»apers and he was informed then that 
they had all Been thrown away. 

IMr. Croggon. Therefore we did not have the pai)ers. We have not had them. 
That is the answer to your question. 

The Chairman. The committee understands, then, tlmt at the present time 
the auditors are working under instructions to cover and reconcile the years 
from 1911 to 1922, inclusive'—the accounts of those years—and in so doing, 
wher'e they have to go Back into the records of earlier years and verify the 
figures, they are to do that; But until this c(mimittee authorizes them to take 
up an exact and complete audit of prior years, they are not yet authorized to 
do that. 

Senator Ball. 


I was called awav for a few minutes. What was the answer 


as to the possibility of accepting the audit of 1911? 


194 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Tlie (.HAiKMAN. 1 think that quite iXKSsible, aeeef)tinj; it perhaps as to some 
items; tliat some accounts could he accepted as having been properly audited 
and others we would i)rohahly want to make inquiry regarding;. 

Representative WrkxHt. In other words, as I understand, they are essen¬ 
tially to do work on the period between 1911 and 1922, but in so far as a refer¬ 
ence to former years may be necessfiry to ^et the record correct between 1911 
and 1922, they are authorized to do so? 

The Craikman. Correct, 

Mr. Croggon. That helps us, in view of the fact that we may be construed 
as bavinj? jjone beyond our authority in some instances, or beyond the subject. 
That was the reason for the letter that we wrote to the chairman. 

Senator Harris. How did you tind that report? Do you think you can get 
the heads and the tails from it? 

Mr. Him.. I‘would rather not criticize the report. 

Senator Harris. We do not want you to criticize it. I do not know anything 
about these men. I assume that they were very good men; hut if their report 
does not sliow just the information we want, of course it is insufficient. It is 
no retlection on them, but I wanted to know just what you found. 

Mr. Hill. The period covered iiy their rei)ort has not l)een checked l)y us, 
but such items as we found that we thought were pertinent iind had not l)een 
covered in that report we have referred to in this iireliniinary report here. 
Whether they can be assumed as omissions or not. is a (luestion to i)e taken ii]). 

Representative Hx\rdy of Colorado. I take it that tliat Mayes report in the 
main covers it pretty weil—pretty thoroughiy. As to checking every item, as 
to whether we are shy $2.8.'5 here or $2.14 somewliere else, we do not care, 1 
lake it. 

Mr. Hill. No, 


Representative Hardy of Coloracio, But we want to lind out whetlier there 
is a few hundred thousand dollars due the District from the Ihiited States, 
and if there is anything that tends to show that, I think that ought to be in¬ 
vestigated; we ought to investigate it. But as to just checking up 40 years of 
tigures. I do not believe in that. 

Mr. Hill. You probably would think that an $18.(M)0 debit account that has 
been running some years on a ledger in the Treasury would be interesting. 

Rejiresentative Hardy of Colorado. Yes; that would l)e. 

Mr. Hill. Especially when that account is styled “ District of C()lnml)ia ” 
and is a debit account. 

Mr. Donovan. Especially when tiie credits are not offset in anotiier account. 

]Mr. Hill. That other account is not known as “ fiistrict of (’olumbia,” 
however. 

Mr. Donovan. It is the same money? 

Mr. Hill. No. sir. 

The Chairman. In your investigations so far, have you had any (Inferences 
of opinion as between yourselves and the accountants that you have been in 
touch with, either those of the Federal Covernment or of the Di.striiT of 
Columbia ? 

Mr. Hill. None at all, excej)t Major Donovan. Major Donovan vei'y nicely 
questions the scope. Otherwise I l)elieve we are in ac<Yird. Is that right? 

Mr. Donovan. Substantially, 

The Chairman. The scope of the measure can not raise any (luestion now, 
because the blue sky is the limit there. Whatever there is Itetween the District 
of Columbia and the United States between 1874 and tbe present dat(‘ the com 
mittee is authorized to investigate. 

Mr. Donovan, I did not make tliat clear. It is not so mnch tiie scojic as it 
is the many imi-ely incidental matters tlmt the accountants are going into 
that are not essential or nei'essary for tlu' determination of the real questi<*D 
involved in this investigation. 

The Chairman. That is a matter of opinion, you know; and we have 
charged the accountants with tiie responsibility of going to the liottom of 
things. Now, if they see anything on the side that may not directly enter into 
the accounts on the records, that they think should be in<piired into, that is 
a question of judgment for them. They are to iie furnished with all nece.ssary 
ojiportunity and information to enable them to determine for this commiltee, 
detinitely and iKisitively, whether or not the accounts are accurate. 

Representative Evans. May I ask a question? 

The Chairman. Certainly. 

Representative PIvans. In order to have a specific case, there used to be the 
old Ceorgetown bonds, and there were subsequently definite bonds, or Wash- 


FISCAJ. lUCLATlO.XS BETWEEN U. S. AND DISTEICT OF COLUMBIA. 195 


iiifitoii bonds, 1 guess, that were not included in the 3.65 b(jnds or ever guar¬ 
anteed by the Federal (toveriiinent. They were upon estimates presented to 
the Apprporiations Committee, paid 50-50. Now, do I understand that such a 
case as that you would consider not a proper c.ase for the auditors to go into? 

INIr. Donovan. No, sir. 

Uepreseiitative Evans. And that they ought to go into? 

Mr. Donovan. Absolutely. 

T3ie Chairman. Will you give us a specitic case where you think the auditors 
are going beyond what they are authorized to examine? 

Mr. Donovan. In the tirst place, if I may just take a few moments and ex¬ 
plain my views. 

The Chairman. Yes. 

Mr. Donovan. I was not aciiuainted with the fact that you had had corre- 
si)ondence with the accountants. (’onse(piently I was proceeding u[)on the 
understanding that the investigation by the accountants would cover the period 
beginning the 1st of July, 1911, down to June 30, 1922. It was my under¬ 
standing that the report made by the Mayes investigation included the general 
account of the District of Columl)ia with the Ignited States from 1874 down to 
1911, on page 43 of which appears the indebtedness of the District of Columbia 
to the United States, concurred in both l)y the a(*eounting officers of the Treasury 
and of the District and verified by the Mayes investigation ; that tliat indebte(l- 
ness of $2,720,000 due the United States, ami admittedly due the Un ted States, 
subject to the difference indicated on ))ages44, 45, and 46 of this i*epoid. wonid be 
their starting point, and that, therefore, they would not have to go back of July 
1, 1911. That was my understanding of the particular work of the accountants 
at this time. I did not know they liad subsequently received permission to go 
back of July 1, 1911. 

Mr. Hill has stated here that I have taken objection to his procedure, or 
rathei* to the scope of his work. For instance, as 1 recall the legislation 
of June 29, 1922, the real objective of the investigation is the ascertainment 
of the existence, in whole or in i)art, of certain surplus revenues of the Dis¬ 
trict in the Treasury of the United States. Now. anything that is not di¬ 
rectly in connection with that ascertainment does not ap])ear to me to belong 
to the legitimate scope of the investigation. For instance. 1 d(^ not see wherein 
tlie (piestion of th(‘ uncollected taxes of the District of Columl)ia. uncollected 
trusd funds or water-main taxes, special taxes, has anything to do with the 
suri)lus in tlie Treasury Department. 

Another instance is the item of the bond issue of $1.2(K),()0t) authoilzed back 
in 1879, wdiich Mr. Hill has laid stress upon in his preliminary report. That 
paidicular bond' issue is very fully discussed in the Mayes report, and was 
actually considered b.v the House District of Columbia (’ommittee, and re¬ 
ported'on ; and yet jNIr. Hill plays that particular item very prominently in 
his report. 1 do not see. for instance, what the uncollected taxes V)etween 
1874 and 1878 have to ilo with this matter, ITiose are things that I took 
objection to. 1 did not know tliat the objection was to be brought by ^Ir. 
Hill to this committee, because Mr. Hill and myself were speaking together 
and not with the purpose in any way of criticizing the report he has sub¬ 
mitted to you. As I said a moment ago, the ordy thought I had in mind was 
to adopt the quickest and most <lirect way to establish the matters in issue 
and whether we have surplus moneys in the Treasury or not. I felt that inci¬ 
dental matters that would take time and cost money and were not directly 
rehited to the conclusion should be dropped. 

llepresentative Hardy of Colorado. As to 
amount an asset or has it been charged off 

Mr. Donovan. That is a definite asset, and 
accounts, and would not until we collected 

into the Treasury. . . .v m .f 

Senator Harris. Was the money collected and put into the Treasury, or pait 

^ Mr. Donovan. Ihider the law we are required to deposit in the Treasury, 
after we collect. We have unpaid balances from 1879 down to date. 

Mr Croggon. I think you will find the question answered in this preliminary 

report, with respect to tiiat part, and the taxation. , , , , . 

The Chairman. The committee will have this report to look over at its 
leisure, and we can take up those questions at our next hearing, I think. 
1 do not feel that I am prepared to discuss tho.se points myself, to-day. I 
think the committee does want to have the benefit of all of the infoimation 


those uncollected taxes, is that 
or forgotton? 

does not enter into the Treasury 
the taxes and turned the money 


196 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


that comes to the aiiditoi’s in the progress of their work, that would be inter¬ 
esting. Now, I do not want to draw the line too finely on what they should 
report on. 

Mr. Croggon. If it is relevant, we would rather do it at onr own expense 
than to leave it out. 

The (^^HAiKMAN. Now. have there been any legal questions, IMr. Hill, that 
have had to he determined, that are not settled? 

Mr. Hill. Yes', sir. We wrote to the Department of Justice on September 21, 
and had a reply from them dated November 18, and T would like to hand it to 
you, if I may. 

The Chairivian. You think these are communications that should he si)read 
on the record here? 

Mr. Hill. That is at the pleasure of the committee. 

The Chairman (after reading aloud the letters referred to). I do not think 
it is necessary to place these letters in the record. 

Statement of Mr. Herman J. Galloway (Resumed). 

Mr. Galloway. The situation with reference to that is this: For instance, take the 
question of the investment of money in a sinking fund, in bonds at a premium. Should 
it develop that there had been such an investment made and that such was illegal, it 
would then, perhaps, be thought the duty of the Department of Justice or some other 
legal officers of the Government to proceed to collect from them, and perhaps even to 
proceed, in some instance, with criminal proceedings. Under those circumstances we 
did not feel that it was proper, in advance of knowing the facts and the concrete facts, 
to thus perhaps incriminate, in a way, or subject to pecuniary liability, the pensons in 
charge of those things, and I did not think that it was proper for us to answer. 

As I see it, the purpose of those questions, or rather the purpose of this in^^estigation, 
can be fulfilled by the accountants, if they find those things to exist, showing the facts 
in connection therewith and presenting them to the committee; and then it would 
be incumbent upon the committee and such officers of the Government as may have 
jurisdiction, to take the action which is required. I feel that is the proper way to 
proceed rather than to give an opinion in advance and try to have them hunt up 
things that may be later questioned. 

Representative Evans. Mr. Chairman, if you will permit me; In other words, your 
opinion is that they should go on and report anything about which they have doubt? 

Mr. Galloway. That is it; and then let the committee and the officials of the Gov¬ 
ernment decide whatever is right. 

Mr. Hill. That removes a part of our assistance that was heretofore given. 

The Chairman. As to these particular things, as to sinking funds and making legal 
provisions and all that; but it does not mean that the legal department would assume 
similar attitude in regard to other questions of accounting. 

Mr. Galloway. To show the seriousness of the situation, Mr. Chairman, if the 
Treasurer of the United States is ex officio in charge of a sinking fund in any way, and 
invests those funds, and we should make a statement, without knowing the facts, that 
the investment of those funds at a premium was improper, we would have charged 
one of the highest officials of the Government with misapplication of funds. That is 
a serious thing, and we should nol do it unless we ar(‘ sure of all the facts, and know 
what we are doing. 

In the second place, take the liability of the Government on the o.lio bonds. As 
you know, that was a mooted question, and prol)ably the whole cjuestion before the 
committee when the Mayes report was rendered, and I think that it may be con¬ 
tended to be still an open question that is to be considered. 

The Chairman. As a first proposition, if he had not done that it would not be a 
reflection on him. 

Mr. Galloway. If he had not? 

The Chairman. No; if he had not done it it would not be a reflection on him to say 
that if he had it would be culpable. 

Mr. Galloway. It would be pretty hard to limit it so that there would not be a 
question there; and there ini"ht be a particular statement ther(^ that would reflect 
upon a man and throw suspicion upon him. 

Mr. Croggon. It will be satisfactory to us if the committee have that in mind. 
We are perfectly agreeable. We just wanted to bring these points out; and we will 
continue to bring them out, and that satisfies us. 

The Chairman. I would try to sum it up in this way; This committee expects you 
in your examination of accounts to report to it what you find from the records appears 
in the matter of handling funds; that certain amounts were paid in, that certain in- 


FISCAL DELATIONS BETWEEN 


U. S. AND DISTRICT OF COLUMBIA. 


197 


securities to meet the sinking fund requirements. The 
CO mittee expects you to state wliether or not those securities were purchased at par 
or whether a premium was paid: and if, on the other hand, after having acquired 
sinking hind securities and held them in its possession, those in charge of the sinking 
hind sold some ot those securities, we want to know that; and we want to know at 
\vhat price they sold them. We will then determine what action we should take, on 
the disclosure of the tacts. 

Hut I am inclined to agree wihi the legal department, that your question is really, 
as addressed to them, rather a little bit previous. If you addressed voiir inquiry to 
tne committee and I am assuming to speak foi' the committee and l want anyone 
who dissents to say so - that the committee wants you to disclose all the facts in 
lelation to these tiansactions, with relation to the sinking fund; as to where the monev 
came from, what it amounted to, and what was done with it. 

M?-. Crogoon. We have no objection, in the slightest, to putting the facts. That 
IS vhat WQ would do anyhow'. But there w'as a (pieslion raised in our minds, and 
peihaps we did go a little lar to find out. Hut we would rather go a little far than a 
little short. 

The Chairman. Is that satisfactory to the committee, to allow it to stand that way? 

Hepiesentativ'e W rk'iHT. I can see no objection to the (juestions being answered by 
the Department of Justice. 

Representative Ha hoy of Colorado. We had better let it stand. 

Representative Evans. Mr. (Eairman, this committee must settle that question 
Itself. It may seek advice from the Department of Justice, confidentially, if it wishes 
to; but the ultimate decision rests with the members of the committee properly con¬ 
vened, with all the facts before them, and the auditors should present to this com¬ 
mittee every fact that touches this fiscal relation between the District of Columbia 
and the Federal Treasury, and if there is a thing that they have any doubt about 
they must present it all the more carefully, that the committee may have all the 
facts. 

The Chairman. Yes. 


Representative Evans. And the committee as then constituted wdll determine 
what is to be done, and then our report is to be made to the various bodies appointing 
us, and they will determine w'hether our report should be approved. 

The Chairman. That is mv thought in the matter. 

Mr. Galloway. Mr. (diairman, if 1 may. You recall that the committee some 
time ago requested a summary of the law's which might be applicable to this. 

The Chairman. Yes. 

Mr. Galloway. Mr. Fehr and myself have compiled that summary, and you can 
see by the bulk of the work that it has been quite a job. Most of this matter had 
to be dictated, because we did not copy the statutes; they have had to be abstracted 
because we draw together the substance of the laws in the least possible space. There¬ 
fore we have but one copy here, and 1 w'ould like to present this copy to the com¬ 
mittee, and if you desire more copies, if you wdll instruct me, I will tr>' to have them 
made in my office; or, if you want to have them made, you can do so. This is the 
compilation that you wanted, and it is in your possession for such use as you may 
see fit to make of it. 

The Chairman. The (jiiestion of additional copies for the use of the committee 
and for other purposes I w'ould like to have determined after we have had an oppor¬ 
tunity to see w'hat this covers and what it amounts to. 

Mr. Gallgway. I do not want you, of course, to determine now; - but I may explain 
that w'e have included here every statute that w'e felt had any bearing on the relations 
between the District of Columbia and the Federal Government, and made a very 
brief abstract of what is contained therein, special attention being given to the general 
])rovisions that affect the general relations, rather than a specific appropriation of so 
many thousand dollars. 1 think w'e have covered all that in a general way, but wdth 
special attention to the general jirovisions; and we have covered the entire number of 
periods of years from 1874 dowm to the present time. 

The Ch.\irman. To what extent w'ould this be of service and benefit to the auditors 
in c-onducting their investigation? 

Mr. Galloway. I do not know. It might be hel])ful to them. 

Mr. Hill. 1 had asked you for a cojiy. 

Mr. Gallow'ay. I did not recall that you had; but 1 guess that w'e can give you one 
of our (‘opies and Mr. Fehr and 1 can do with only one copy between us until we have 
had additional copies made. 1 imagine sooner or later we will Jiave additional copies. 

The Chairman. On that, 1 would like to glance it over and form an opinion as to 
whether it w'ould be advisable to have additional copies printed now, or if w'e could 
have them ])rinted at the time that we have our first report jirinted. 


198 FISCAL RELATIONS BETWEEN IT. S. AND OISTRK^T OF COLUMBIA. 


Mr. Galloway. I will givo this copy to the accountants, then, Mr. ('hairman 
[handing copy to Mr. IlillJ. 

The Chaiumax. Very w-ell. 1 will have this reviewed by some one in my office 
who is familiar with the legal side, and 1 want to look it over. 

Representative Wri(;ht. And there should be an index to it. 

Representative Evaxs. Mr. Wright’s suggestion is a very })roper one. There should 
be an index. 

The Chairmax. Wheii we make our first re{)ort we can have an index made and 
have it included in the report. 

What further action on the part of the committee is advisable to-day? Have you 
anything further to suggest, Mr. Hill? 

xMr. Hill. There is only one thing that occurs to me. 1 think I should have men¬ 
tioned tliis before. 1 have said that Ave were waiting for certain information from the 
Treasury Department. Certain persons have been appointed to examine the sinking 
fund accounts, and that work is still going on. As to just what the status of their work 
is—of these representatives of the llnited States Government—1 am without any 
information at this time. I think, though, that a final analysis of the whole situation 
is going to take considerable time. 

The question of the liability of the District of (’olumbia on interest accrued and un¬ 
paid, which we feel affects the balance, must be established. Probably it will take 
some time for them to finally establish their figures and give the informationn that 
they are waiting for now. That is in addition to balancing the cash, the errors in which 
we have already called their attention to. 

The Ohairmax. What other information have you requested of the Federal au¬ 
thorities which you have not received as yet? 

Mr. Hill. That is certain open balances on an auxiliary ledger that is held in the 
department of bookkeeping and warrants. A representative of that department 
called me on the telephone this morning and said that as to at least two of the items 
he was in a way to probably have them adjusted. The balance of the items would 
require some study on their part. 

Senator Harris. Have you conferred with Mr. Hodgson? 

Mr. Hill. Mr. Hodgson has lieen with us continually and he has been very helpful, 
especially in helping us to locate old recordsi. 

Mr. Galloway. He has a desk in their office up in the old Land Office Building. 

Senator Harris. I have been away from Washington and am not familiar with 
what was done after the last meeting I attended. 

The Chairman. It seemed to me that if we could get a report from these gentlemen 
in some form, not later than the 20th of December, we could probably, in the H^ht 
of that, be able to reach a conclusion as to the procedure we should follow regarding 
the accounts of earlier years. 

Ml’. Croggox. I think we should render that report before you should make your 
decision, because there may be a lot of items there in which we could save trouble 
and expense. We will tr>^ to get the report to you by the 20tb of December. We 
do not want to miss anything. We would rather be late than wrong. 

The Chairman. Has anyone anything further to suggest for to-day? 

If there be no other questions troubling you at the moment, we might as well 
adjourn now, subject to call. 

(Thereupon, at 4.15 o’clock p. m., the committee adjourned, subject to the call 
of the chairman.) 


Monday January 29, 1923. 

Joint Select CTommittee of the Senate and House of Representatives on Fiscal 
Relations between the United States Government and the District of Columbia 
subsequent to July, 1874. 

The committee met, pursuant to call of the chairman, at 10 o’clock a. m., Senator 
Lawrence C. Phipps presiding. 

Present; Senators Phipps (chairman) and Ball, and Representatives Evans, Hardy 
of Colorado, and Wright, 

There appeared before the committee Mr. Herman J. Galloway, representing the 
Department of Justice; Mr. Daniel J. Donovan, auditor of the District of Columbia; 
Mr. Earl Taggart, representing the General Accounting Office; Mr. Edward Colladay. 
representing the citizens’ associations of the District of Columbia; Mr. Alonzo Twee- 
dale, a former auditor of the District of Columbia; and Representative Ben Johnson 
of Kentuckv. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 199 


Statement op Hon. Ben Johnson, a Representative in Congress from the 

State of Kentucky. 

The (hiAiRMAN. Congressman Johnson, all the members of the Joint Select Com¬ 
mittee on this District matter are present, except one. Senator Harris is not here, 
but he expects to come in later. We thought that you perhaps might have some 
comments to make on these differences that have been under discussion, in the light 
of the auditor’s report on the work they have performed, and I know the committee 
would be glad to hear from you first. 

Representative Johnsiun. Senator, 1 am very sorry to tell you that 1 have read 
none of the reports, and since that is true, if further statements are to be made, what 
1 do say I would prefer to say after hearing some of the other statements, because I 
am not at all familiar with this. Are other statements to be made? 

The Chairman. The report of the accountants, Haskins A Sells, was printed, and 
then there were pul)lished also the comments on the same made by the Auditor for 
the District of (hlumbia, and by the representative of the Treasury Department and 
the representative of the Department of .Justice. 

Representative .Johnson. I saw them in the paper. 

The Chairman. I know your interest, and I assumed tliat you had seen tliem. 

Representative Johnson. 1 read tlie headlines, and a very few lines of some of 
them; Jnit I have read no report at all. 

Representative Hardy. May I suggest something aJiout procedure? 

The Chairman. J would lie very glad to liave your suggestion. 

Representative Hardy. We are liere informally; and as I look at it, this committee 
lias liad the report of Haskins A Sells before it, and has had the comments of Mr, 
Donovan and Mr. Galloway and.Mr, Taggart, and the citizens’ committee, and this 
committee is coming to a point where it is considering big items where there might 
be some questions of differences between the views of the Government and those of 
the District, I would suggest that we take up those items one at a time, the big items 
that we have dug out, and talk about them. 

We recognize that Congressman Johnson has been pretty well posted on the affairs 
of the District here for many years, and we would be glad to have him talk about them, 
and to have others present talk about them, just to help us to get the viewpoint of 
other folks. 

Representative Johnson. I do not mind, Senator, taking the resolution under 
which you are acting and giving my views as to what I think that your accountants 
should have gone into. Whether they have or not, I do not know. 

The Chairman. Well, for your information I might say that the committee at its 
first meeting carefully^ considered the plan of procedure, and in view of the fact that 
the transactions to be reviewed covered a period going back to the year 1874, and 
that those earlier years had been audited, year by year, by the Comptroller General’s 
office, and later reviewed by the Mayes audit and the Spalding audit- 

Representative Johnson. If you will permit me to interrupt you there- 

The Chairman. Yes. 

Representative Johnson. They were not what you might call, Senator, audits in 
the strict sense of the word. They were supposed to look through the acts of Con¬ 
gress and find where Congress had made loans or advancements to the District of 
C’olumbia, with the distinct understanding that those that the District should reim¬ 
burse, they should make a report as to those. Now, they' did report as to several 
of those, and the Congress directed what they found, and which finally became un¬ 
disputed, to be returned to the United States. But there was not an audit of the 
accounts between the District of Columbia and the United States, made J3y^ either 
Mayes or Spalding. 

The Chairman. That could be termed a complete audit, you mean? 

Representative Johnson. Yes. 

The Chairman. There were audits made but you would not term them complete 
audits? 

Representative Johnson. Why, 1 would term them most incomplete. 

The Chairman. If I had Jieen permitted to complete my statement, it was to this 
effect, that starting in at the first of the y'ear 1911, at which point a balance had been 
stated, the auditors, pursuing the work up to July, 1922, in the light of the informa¬ 
tion that that would disclose, they considered whether or not it was advisable to 
accept—whether it could properly accept—the audits that had been previously' 
made, as being complete, or whether it would be necessary to recommend or authorize 
the auditors to go back over those prior years; and that jioint is the one that the com¬ 
mittee is endeavoring to determine. 

Representative Johnson. If I may be permitted to repeat, I would like to empha¬ 
size that both the May'es and Spalding were looking for specific items, expenditures 




200 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


for which the United States should have heen reimbursed, and for which it had not 
been reimbursed, and they did not undertake to audit the accounts or to make any 
balance at all. 

The Chairman. You are referring to specific cases which were reported upon and 
which were settled—that is, that Congress passed ui)on? 

Representative Johnson. There was, if I recall—I have not seen anything of it 
now for some years, but if I recall correctly—some money that had been advanced on 
account in July, and there w'as, I recall, provision made that the United States should 
be reimbursed for that. That was looked into. 

Then there were some advancements made on account of schools; and then as to 
where the central market house rentals properly belonged; and then as to the pay¬ 
ment of the 3.65 bonds which were authorized ])y the act of 1874. Then the largest 
item was amounts owed to the United States Government by the St. Elizabeths 
Insane Asylum. 

The Chairman. Those audits required about three years’ time? 

Representative Johnson. Longer than that. Senator, much longer. I will tell 
you why it required so much time, and why I believe that this committee can not 
make a complete audit from the Treasury books in such a short time. They might 
be able to do it from the District books. When Mr. Mayes first commenced this work 
of looking up these items, he went down to the Treasury Building and went back 
under the street, in the northern part of the liiiilding, where all these books had been 
stored, and there he stripped himself to the waist, all except his undershirt, and 
through the dirt and the cobwebs which had accumulated there for many, many 
years, he got out these books and went through them there; and it was not an in¬ 
vestigation that could be made just by going to somebody’s office, but it was a long, 
tedious piece of work. 

The Chairman. The present auditors made most strenuous endeavors to locate a 
controlling ledger with reference to the sinking fund, and after a most arduous search 
they never succeeded in locating that ledger. The records prior to 1900, I under¬ 
stand it, have been disposed of, and there are no records extant except the annual 
stated balances, the annual statements of accounts, that can be located now. The 
auditors, under instructions from this committee, in conducting their work for the 
years 1911 on, also had instructions to go back into previous years where anything 
came to their attention, or the transactions of the years they had under review in¬ 
volved transactions of prior years, and in that year they were under the necessity 
of trying to locate these earlier records, with the result that I ha\ > stated. In some 
cases they did secure information. 

The audit for the years 1911 to 1922 disclosed that with the exception of minor 
errors, the directions of the Congress as contained in the annual appropriation bills 
were carried out absolutely. The accounts were properly charged and credited and 
the balances properly carried to what is known as the general account 

Now, it is the thought, in the light of the fact that the balances were stated each 
year and checked by the Comptroller General’s office, that the direct provisions of 
the annual appropriation bills from 1878 on would be found to have been followed 
accurately; possibly slight errors might have crept in, but there is very great ques¬ 
tion whether any amount involved would justify the expenditure of labor to review 
the work that was done by the Comptroller General. 

Representative Johnson. I take it for granted that the Comptroller General w'ould 
not have audited items that did not appear. 

The Chairman. Yes. 

Representative Johnson of Kentucky. That w^ere not brought to him. For 
instance, you take the very large amount of money that had been paid to the District 
of Columbia on account of the St. Elizabeths Lunatic Asylum; you can take the 
auditor’s report made out by Mr. Tw'eedale while he was auditor, and while there w^as 
approximately $1,500,000 collected—was there not, Mr. Tweedale? 

Mr. Donovan. The amount w^as a million and some hundreds of thousands of 
dollars. 

Representative Johnson of Kentucky (continuing). A million and some odd hundred 
thousand dollars was unquestionably due to the United States from the District of Colum¬ 
bia, yet Mr. Tweedale as auditor for the District of Columbia had failed to carry that 
liability in his annual reports. If it was in the annual reports it w^as there in such 
a way that a no\dce in accounts like myself could not find it; but after the matter had 
been brought up on the floor of the House and these items had become admitted by 
the superintendent of the insane asylum, then Mr. Tweedale as auditor did have some¬ 
thing to say in his annual report about it. 

Now if you remember correctly, and if 1 properly understand it—I wish to empha¬ 
size that I am nothing of a bookkeeper or accountant; I know nothing about those 
things—the St. Elizabeths Lunatic Asylum had United States inmates, and if had 


nSCAL RELATIONS BETWEEN IT. S. AND DISTRICT OE COLUMBIA. 201 

• 

District of Columbia inmates. The maintenance of the District of Columbia inmates 
was to be paid to the United States by the District of Columbia; but, be<?inning with 
tne tirst year of that arrangement, many, many years ago, when the first monthly 
payment tell due to the insane asylum from the District of Columbia or from the 
United States, whichever it was, they made only partial payments. That went on 

tor many, many years without any monthly account or settlement, with no annual 
statement ever made in full. 

The auditor of the District of Columbia had to know that that was not paid iu full 
yet it was not carried in his annual reports. 

The Chairman. That matter has since been corrected, has it not? 

Representative Johnson of Kentucky. It has been corrected ])artiallv. It was 
corrected by ha\ung the District of Columbia pay to the United States the principal 
tliat Vv’as due. But, under this resolution, the District of Columbia is now required 
to pa\ interest on that sum to the United States. Just in glancing over the report 
as published in the newspapers I saw nothing of that kind; but 1 do not take the news¬ 
papers for everything that is said. 

1 he Chairman. In the light of the fact that when the discrepancy was disclosed 
and the amount found due by the District of Columbia was ascertained, the Congress 
ordered that the District repay to the Federal Government, the Congress itself waived 
any charge of interest. 

Representative Johnson of Kentucky. If it is your view, Senator, that at that time 
the Congress waived it, the subsequent Congress—^the present Congress—did not waive 
it, but required that interest be paid on that amount. 

The Chairman. The present Congress under that resolution has not ordered that 
interest be paid on a settled account which a previous Congress had acted upon. 

Representative Johnson of Kentucky. The resolution under which you are acting 
emphatically requires that interest shall be paid on the amount found due, either by 
Congress or otherwise. 

The Chairman. If that is your interpretation, it was not mine, sitting as a conferee 
on the bill. If it had been, I never would have agreed on any such proposition. I 
want to go on record strongly as saying that I could never vote that where Congress 
has decided that the District should pay a certain sum of money. Congress should 
•later reopen the matter and order that interest be charged; that it should be changed 
and interest be charged on that item. That door is closed, in my opinion. 

Representative Johnson of Kentucky. Well, I can only disagree with you in 

your opinion. Senator; because, as a conferee sitting with you-- 

The Chairman. Yes. 

Representative Johnson of Kentucky. I was most clear in my understanding that 
the language meant just what it says, that wherever an amount of money had been 
found by Congress to be due, they should go back and account for the interest on that» 
The Chairman. That was not my understanding. 

Representative Johnson of Kentucky. And I think it is just as clear as language 
can make it. 

The Chairman. The Congress, of course, has the power to do it. 

Representative Johnson of Kentucky. The present Congress; or, as you say, a 
former Congress, had authority. A former Congress may have contemplated it with¬ 
out expressing it, that that payment was to be a finality; but the present Congress, 
in the resolution under which you are acting, states positively that it was not to be. 
The Chairman. Of course we disagree absolutely on that. 

Senator Ball. The former Congress in making that provision made it to settle that 

old claim. Was not that Congress’s reasoning- 

Representative Johnson of Kentucky. I do not think so. 

Senator Ball. In'passing it? 

Representative Johnson of Kentucky. I do not think so. I think it was Congress’s 
intention to make them pay back the principal, leaving the other question open, 
and it remained open until the present Congress decided that they should pay interest. 

The Chairman. In one case where a charge was ordered and made—and I am not 
sure now whether it was this particular one of St. Elizabeths Hospital or not—the 
committee reporting to the Congress advocated that the question of interest be waived, 
and the Congress adopted that suggestion. 

Representative Johnson of Kentucky. I have never so understood. Senator. 

The Chairman. Well, it is evident that it is a fact. 

Representative Johnson of Kentucky. Whether that is so or not, one Congress 
can not bind a future Congress; ^nd if the present Congress, just as the last one, has 
legislated otherwise about it, why, of course, the present legislation prevails. 

Senator Ball. In your judgment it is wise for one Congress to open up these old 
questions after a former Congress has settled them? 

32894—S. Doc. 301, 67-4-14 





202 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF (X)LUMBIA. 


Representative Johnson of Kentucky. You take it for granted: your premise is 
laid down now that a former Congress has settled this. There I take issue with you . 
I do not think the former Congress ever settled it. 

Now, Mayes and Spalding made reports that they found that many advances to the 
District of Columbia under certain congressional acts had been paid to the District 
of Columbia, with the provision that the United States was to be reimbursed, and then 
their report was as to the amounts advanced, and the report also was to the fact that 
no reimbursement had ever been made. So the two naked facts of advancement 
to the District and nonpayment by the District to the United States of a specified 
amount were the extent of their reports. 

Then the Appropriations Committee just put in tlie appropriation bill clauses 
requiring the District of Columbia to accouut for and pay the amounts so reported, 
saying nothing whatever of interest, as to whether it was to be calculated at some 
other time or whether it was to be remitted. 

That condition relates to the insane asylum affairs, and to a number of other items. 
If 1 had known that I was coming here, I would have read the report. 

The Chairman. Of course I do not at all agree with your understanding of the intent 
of the resolution or the law—that is, the act creatingthis joint committee. As to that, 1 
should think that the committee would be inclined to seek the advice of the counsel 
allotted to it by the Department of Justice, and to very carefully at the same time 
consider the point you have raised. 

Representative Johnson of Kentucky. I do not know how we are to get at the in¬ 
tent, Senator, but in arriving at some conclusion in that direction, I can say that I 
wrote that part of amendment No. 1, and that it was clearly my intention to so word 
it that the District of Columbia should account for interest on the sums of money 
which had theretofore been found by Congress to be due to the United States. 

The Chairman. I can say, for myself, as one member of the conference, that I did 
not so understand; nor do I recall any statement made by you iiersoiially that would 
elucidate that point and make it clear to the other members of the conference that 
that was the intention of the item to which you have referred. 

Representative Johnson of Kentucky. If you will recall. Senator, there was very 
little discussion of that draft of the resolution in committee. Copies of that draft 
were submitted to you and Senator Jones and other Senate members of the conference. 

The Chairman. At the conference table, the morning it was adopted—agreed to. 

Representative Johnson of Kentucky. No; it was submitted in advance. 

The Chairman. I beg your pardon. 

Representative Johnson of Kentucky. I V)eg your pardon, it was. 

The Chairman. My recollection is that the conferees on the part of the Senate 
submitted a recommendation on the point. It was taken by the House conferees, 
and incidentally the membership of the conference on the part of the House was 
changed in that Messrs. Davis and Evans were unable to represent the House, and 
Messrs. Madden and Cramton were substituted for them. ^ly recollection is that my 
first hearing of the House counterproposal- 

Representative Johnson of Kentucky. Just one moment. Do 1 understand you 
to say that the conferees were changed'—that the. conferees on the part of the House 
were changed—during the progress of this very matter of which we are now speaking? 

The Chairman. Yes; that is my recollection. Mr. Evans may recall it. 

Representative Evans. I think, if you will excuse me, that I had gone away the 
early part of May, and the situation was this; jierhaps this will bring it back clearly: 
We had, as we thought, agreed upon a conference report, l)ut you, Mr. Chairman, 
were held up in the Senate by an objection of some Senator because it had not lain 
over one full legislative day, and you were recessing from day to day. 

The Chairman. Yes. 

Representative Evans. And that ran along, 1 think—that recessing—until June. 
Then it was getting close to the time when the bill had to be passed. Mr. Davis was 
in his campaign, and I had gone home for reasons, and you suggested a change in the 
Senate; that required that to go to conference again, and then Chairman Madden 
and Mr. Cramton were put upon the committee, or were made managers on the part 
of the House, and the entire matter which was changed—and that involved this 
matter which we have under discussion—was then taken up by them. I never had 
anything whatever, as a conferee, to do with this particular part, because it did not 
come up until after I had gone away from Washington. 

Representative Johnson of Kentucky. You will recall. Senator, that, jierhaps 
upon your own motion—I am not quite sure of thgt, however—Senator Jones and 
myself were appointed the subcommittee to prepare what is now known as amend¬ 
ment No. 1, and that we exchanged a number of conflicting views about it; I wrote 
something that was not acceptable, and he wrote something that was not acceptable 



JISCALi BELiATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 203 

went back and forth until we finally agreed upon what we have 

m that hue. 

The Chairman, 1 remember that you and Senator Jones collaborated on that. 

Kepresentative Johnson of Kentucky. For weeks. 

The Chairman. But I do not see how we can get forward at all by going into (he 
details of that now. Congress passed this act under which this committee is acting. 
Now you raise a point as to the intent and purpose of that portion of it. 

Representative Johnson of Kentucky. \\Tiich I say is clearly expressed. 

The Chairman. You and I disagree as to the interpretation of that, and we will 
have to take that under advisement. 

Ri'presentative Johnson of Kentucky. Now, Senator, right in that same connection, 
I'epeat that I have not read any of these reports, but I read the headlines 
of the reports, and where it was put off into subsections, I read those headlines, and 
then 111 a few instances, I read a few lines down under those headlines. I recall, 
and it comes just in this connection, too, that I saw in the statement by the attorney 
from the Department of Justice—I do not know him and I do not remember his name— 
dealing with this very subject he said, although I read it hastily and I may have mis¬ 
understood it, that he found that the ascertainment of interest under that particular 
language was not workable, and he spoke of interest to be ascertained in the future. 

I take it for granted that he did not give close attention to the language of the 
resolution. If he had, I do not think he could possibly have said, relative to that, 
what the newspapers quote him as having said. He said, in substance, if I caught 
him correctly, that that was not workable because down in the future you could not 
ascertain what the interest was going to be. But the resolution—I have not it before 
me and can not quote it; I can only give the substance of it from memory- 

The Chairman, The resolution is right here. 

Representative Johnson of Kentucky. That is the resolution, yes, which you have 
handed me printed in this newspaper. But I had reference now to the statement made 
by the attorney from the Department of Justice. 

Mr. Galloway. All the reports are here, on one sheet of the newspaper. 

Representative Johnson of Kentucky. The newspaper has just been handed to me. 
Under the subtitle of “Question of interest,” I find the following: 

“The report on page 2 states that no consideration has been given by the accountants 
to the question of interest. The resolution provides in part that: 'And in any event 
any money may be, or at any time has been, by Congress or otherwise, found due, 
either legally or morally, from the one to the other, on account of loans, advance¬ 
ments, or improvements made, upon which interest has not been paid by either to 
the other, then such sums as have been or may be found due from one to the other 
shall be considered as bearing interest at the rate of 3 per centum per annum from 
the time when the principal should, either legally or morally, have been jiaid, until 
actually paid.’” 

Now, says the author of this report further: 

“It occurs to me that this clause is not capable of literal administration for several 
reasons, among which are the following: It seems to contemplate the calculation by 
your committee of interest upon sums which Congress may in the future find due.” 

The question there depends upon what is meant by “the future.” As the author 
of that language I intended to say, and with such of the committee at that time as 
I went over the matter with, thought that I had clearly said, and still think that I 
have clearly said, and they thought so, too, that the language there meant not after 
the conclusion of this report; but you see this language was written and went into a 
bill which was to become effective on the 1st day of the following July. Imme¬ 
diately following the 1st of July the subcommittee, which is now sitting, was to com¬ 
mence its work, and the word “future” there meant as to what the accountants, or 
that subcommittee, might find for the past; or, in other words, the language there was 
intended to express, and in my humble opinion clearly expresses, that interest was 
to be accounted for at the rate of 3 per cent per annum on all amounts which then 
had, by Congress or otherwise, been found to be due, or which thereafter might be 
found to be due; “thereafter” or “the future,” whichever expression you choose to 
take, meaning that which thereafter or in the future would be found to be due by 
this committee. Consequently, I contend that it is very easily workable. 

The Chairman. Now, may I ask you this, Congressman: At one time when the 
District had become involved in debt over the construction of very large improve¬ 
ments—I believe one was the Municipal Building—and was in debt to the Govern¬ 
ment, (ingress took cognizance of that and passed a resolution, or enacted a law, 
under which the District was ordered to repay or to pay the amount found due within 
five years, and to pay interest on the annual balances at the rate of 2 per cent per 
annum. Under your construction of the language of this present resolution which 





204 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


you havo (jiioted, or this act, is it your contention that this committee should now 
readjust that account and raise that interest charge to 3 per cent, notwithstanding 
the fact that the Congress at the time dealing with the question ordered that the 
2 per cent rate be charged? 

Fvepresentative .Tohnson of Kentucky. 1 would say that where Congress had 
specifically fixed a rate of interest to be charged, that is ])articular legislation which 
stands out because of that fact, and does not come under the head of general legis¬ 
lation. In other words, where Congress has fixed the rate of interest, that rate of 
interest must prevail; but where Congress has not fixed the rate of interest, and then 
a rate of interest afterwards is fixed to take care of propositions or advancements u])on 
which no rate of interest had been fixed, then that rate prevails. In other words, 
where ("ongress has specified, has fixed, a 2 per cent rate, then that rate must prevail. 
Where it has fixed no rate of interest, then the 3 per cent rate prevails. 

The ('hairman. Now, take the case where the Congress with a report before it 
recommending that a certain amount should be charged, acts on that, and with it 
there is ])resented to the Congress the actual figures of the accrued interest, and the 
committee recommends that no charge for interest be made, and Congress by act or 
by resolution orders that the charge of the principal sum be made, but does not order 
that interest be charged, what would be your interpretation there? 

Representative Johnson of Kentucky. You are lawyer enough or business man 
enough, Senator, to know that where money is loaned by one to another to be repaid, 
of course the word “loan’’ carries wdth it the implication that it is to be repaid, but 
wherever money is advanced by one to another to be repaid, without so saying it 
bears interest. If I make you a promissory note to-day and say that one year after 
date I have promised to pay you $100 after that note falls due, if I do not immediately 
repay it, then interest accrues. 

The Chairman. That may be correct. I am not lawyer enough In say so. and I am 
not informed on it. 

Representative Johnson of Kentucky. If I say that after a certain date I promise 
to pay you $100, then it bears interest from that date, although the note itself says noth¬ 
ing about interest. 

The Chairman. But, then, if an act ordering the payment of money passes the Con¬ 
gress without any charge of interest being attached thereto, and the money is paid 
within the time- 

Representative Johnson of Kentucky. You mean the principal? 

The ('HAIRMAN. I mean the principal sum is paid within the time at all, or within 
a reasonable time- 

Representative Johnson of Kentucky. Then, if Congress should come along after¬ 
wards, is the Congress here to direct that a special committee be appointed for the pur¬ 
pose of going back and ascertaining the amount of that interest, and provides for its 
payment at 3 per cent, then it must be done. 

Repre.sentative Hardy of Colorado. When was this St. Elizabeths settlement 
made? 

Repre.sentative Johnson of Kentucky. It was never made in one payment. 

Representative Hardy of Colorado. Yes; but when was the congressional act passed 
making the settlement? 

Representative Johnson of Kentucky. 1 should say it was passed, if I remember 
correctly, but I am not quite sure about it, in 1913 or 1914. 

Representative Hardy of Colorado. About eight years ago? 

Representative Johnson of Kentucky. And the investigation ran along for several 
years before any part of the insane asylum money was paid. 

Representative Hardy of Colorado. Of course, if 1 ran a big wholesale house and 
you owed me $100,000 in vaiious items, and if we made an agreement to settle it up. 
that you were just to pay me $100,000, and eight years afterwards my heirs and assigns 
came back on your heirs and assigns and said, “ Here, you paid that principal, but vou 
did not pay the interest on it, and we are going to sue you for the interest,” 1 would 
doubt the equity of it. 

Representative Johnson of Kentucky. You are exactly right about that; but we 
have here- 

The Chairman. We have here a case of a dilatory creditor? 

Representative Johnson of Kentucky. No; wo have the case of a dilatory debtor. 

The Chairman. It is equally bad for the creditor. 

Representative Johnson of Kentucky. No; and that creditor was so dilatory—I 
mean the District of Columbia—that it did not pay until coerced, and then it paid 
only to the extent of its coercion, which was the principal. Now, Congress has under¬ 
taken to coerce the jiayment of interest, and has appointed this committee to carry 
out that provision. 





I' lRCAL RELATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


205 


* J'hairman. Suppose that during that same time there were funds l)elonging 

to the debtor in possession of the creditor, and the creditor had made no claim for re¬ 
imbursement? 

Representative Johnson of Kentucky. If a contingency or a state of affairs like 
that had been put in the resolution, directing that that be taken into consideration, 

en this committee would have to take it into consideration. But since vou have a 
positive direction which does not include that, then you can not. 

Ihe Chairman. This present Congress, of course, can take any report of this com¬ 
mittee and disregard its recommendations, even if it should set up an amount and 
recommend its payment. 

Repiesentative Johnson of Kentuckv. Yes; this Congress or any future Cono’ress 
can settle it to its own liking. “ .7 ^ 

Mr. Galloway. Mr. Chairman. I just want to make one or two remarks in con¬ 
nection with what Congressman Johnson has said here. 

The Chairman. Certainlv. 


Mr. Galloway. The first is that I think that he has ])ractically said that what 
criticif^ii I did make on this interest clause is proper, because my statement was that 
it was hardly capable of literal administration, and he has undertaken to explain as to 
what the intention of Congress was in the face of the exact provisions of the law. 
Therefore I do not feel that it is necessary for me to take the time of the committee 
further in arguing that question. The committee, of course, has a right to say what 
it thinks and feels was the intention of the law. 

Representative Evans. May 1 interrujit there—even though there is an apparent 
discrepancy? 

The Chairman. I think we will get on better if you let him finish his statement. 

Representative Evans. But he was leaving that subject, Mr. Chairman, to go to 
another. ' 

The Chairman. 1 do not object to your interruption at all, if Mr. Galloway does not. 

Mr. Galloway. That is all right. 

Representative Evans. Under the case stated, the duties of this committee being 
to finally find the fiscal balance, and its ha\dng a duty, to determine that balance, 
that being one of its duties, assuming that to be true and that there has heretofore 
been a balance determined on which no interest was fixed, is it not the only fair 
construction, to take the contruction or interpretation that Mr. Johnson has rnade? 

Mr. Galloway. Mr. Congressman, I feel that that depends so much upon the 
intention of Congress and also upon the language of the claim that you are consid¬ 
ering. Assuming that all that Mr. Johnson has said is that the intention was correct, 
and that was the intention of the entire committee in recommending this legislation 
and the intention of Congress in enacting it, I want to call your attention to this 
part of the act. It says, “loans, advancements, or improvements made.” Now, 
would you consider that the amount of money which arose with reference to the 
indebtedness which is claimed to be due, growing out of the insane hospital, was 
either a loan, advancement, or an improvement? Was it not a thing which arose 
through an improper application or administration of the law? Certainly the Con¬ 
gress had not intended that. So that you see every one of these things that are 
suggested here depend upon the circumstances and facts of individual cases, as to 
whether or not they are mu thin the provisions of the act; assuming that all that Mr. 
Johnson has said i^ correct as to the intention and meaning of the act. I do not see 
hoM* we can intelligently reach any conclusion on these things unless w^e knoiv first 
what we are considering, and the facts and circumstances connected with it. 

Representative Johnson of Kentucky. Suppose we assume, for example, that the 
United States Government advances a given sum of money for the construction of a 
jail, MUth the provision that the United States shall be reimbursed; or that the United 
States has advanced a specific sum of money for a schoolhouse or some like purpose, 
Muth the provision that the money was to be reimbursed, and the principal had been 
repaid to the United States, and that ('ongress afterwards came along and provided 
that that amount of money should bear interest at the rate of 3 per cent: is it your 
contention that that can not be ascertained? 

Mr. Gallom’ay. No; it is not my contention that that can not be ascertained. My 
contention is that you can not literally apply this law, because, by its express words, 
it may be applied to amounts in the future, after this committee has ceased to function. 

Representative Johnson of Kentucky. But I think I have explained satisfactorily 
that this word “future” does not mean after this committee has ceased to function. 

Mr. Galloway. You have explained that that M'as your intention. 

Representative Johnson of Kentucky. I think the language is just as clear as it 
can be. I am surprised that anybody can read it any other way. ^ 


206 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Evans. What I was going to say was omit all reference to the intent 
of the legislators as individuals and simply take your language, and the duty that 
the committee has and of which that provision is a part, and how are you intending 
to make that a law applicable to a duty to be afterwards created, when their duties 
are confined only to existing conditions? Your law, as I understand it, is construed 
as a whole. That is one of the primary and elementary laws of construction. And 
to say that that is to be applied to something that may happen in the future is going 
entirely outside of that canon of construction, is it not? 

Mr. Galloway. Well, the law says so. I can not say, except what the law says, 
in that respect. 

The Chairman. I would like to call Mr. Galloway’s attention to this language in 
the sundry civil act approved July 1, 1916 [reading]: 

“Reimbursement account: Support of insane, St. Elizabeths Hosjiital. Reim¬ 
bursed in 1917. 

“To further reimburse the United States, and in full the amount due on account of 
one-half of the per capita cost of maintenance,” etc. 

The amount involved in that item was $282,754. That reimbursement being stated 
as a definite figure and to be “in full,” could any question of interest be raised even 
under the language of this act which we are now discussing, the act of June 29,1922? 

Mr. Galloway. I think that the argument which Congressman Johnson made with 
reference to the other provisions or other laws where interest was computed, and said 
that it was final and settled, would certainly apply to a case of this kind where it was 
followed by an act, and Congress has decided to take no interest. I do not see how 
that is applicable to the one case and not the other, Senator. 

Representative Johnson of Kentucky. If you will allow me to say a word here- 

The Chairman. Yes. 

Representative Johnson of Kentucky. 1 would say that Congress, by the language 
you have just stated, said that was to be in full. If that was the only law on the 
subject, that would be in full; but we have a law before us, that under which this 
committee is acting, which says that it shall not be treated as in full. It opens up 
the whole subject to go back over all these things to 1874. 

Now, the United States has not raised the question as to any of these things. The 
District of Columbia herself has raised the question by claiming a surplus fund; that 
she has done more than her part, under the fiscal relations, toward the upbuilding 
and the beautifying of the Capital of the Nation. 

The Chairman. 1 would heartily agree as to that proposition. As I take it, certain 
Membeis of Congress have raised the question as to whether or not the surplus exists. 

Representative Johnson of Kentucky. They did it upon the importunity of the 
daily press. 

The Chairman. The (}uestion is not raised by the District of Columbia. The 
District has had stated accounts from year to year, showing for many years a deficit 
on which she was ordered to make good, and incidentally to pay interest thereon; and 
then in later years, when the taxation exceeded the appropriations, not by reason of 
any failure on the part of the commissioners to ask for expenditure of the money that 
would have disposed of the entire amount of taxation collected in the District, but 
because of the failure or refusal of the Congress to appropriate adequately for the 
needs of the District, the surplus has accrued or accumulated. 

Representative' Johnson of Kentucky. The law under which this committee is 
acting opens a wide field for the purpose of ascertaining whether there is a balance 
due or not; whether there is a surplus due the District of Columbia in the Treasury. 

Now, if you will permit me to read just a few lines of that act and then to say a few 
words with reference to them, I will say nothing further unless somebody desires to 
ask me questions about it. The material part of the act reads as follows [reading]: 

“A joint select committee, composed of three Senators to be appointed by the 
President of the Senate, and three Representatives to be appointed by the Speaker of 
the House of Representatives, is created and is authorized and directed to inquire 
into all matters pertaining to the fiscal relations between the District of Columbia and 
the United States since July 1, 1874, vdth a view of ascertaining and reporting to 
Congress what sums have been expended by the United States and by the District of 
Columbia, respectively, whether for the purpose of maintaining, upbuilding, or 
beautifying the said District or for the purpose of conducting its government or its 
governmental activities and agencies, or for the furnishing of conveniences, comforts, 
and necessities to the people of said District.” 

Under that language you must take into consideration what the United States 
Government has done toward maintaining, upbuilding, or beautifying the District of 
Columbia out of its own purse. You must take into consideration what the United 
States has doife toward furnishing conveniences, comforts, and necessities to the 
people of the District of Columbia, payable out of its own purse. 



riSCAI. RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 207 


lake the Potomac Park. The Potomac Park has been built by the United States, 
not by the joint efforts of the United States and the District of Columbia. Nobody will 
dispute that Potomac Park has been built, pumjied out of the river, for the purpose of 
upbuilding and beautifying the District of Columbia. Consequently, under this 
language this committee must find the amount of money that the United States 
Government, independent of the District of Columbia, has expended in creating 
Potomac Park, which is for the upbuilding and beautifying of the District of Columbia, 
and upon that ainount she must find 3 per cent interest. 

Further, the Lincoln Monument certainly does not disfigure the District of Columbia. 

The Chairman. That is a memorial. 

Representative Johnson of Kentucky. The Lincoln Monument. That has been 
built out of United States money exclusively: but under the language of the bill it 
upbuilds and beautifies the District of Columbia. 

Under this language this committee must find the cost of the Lincoln Monument 
and 3 per cent of the amount expended. 

The United States Government has acquired park space between the Capitol and 
the Union Station, commonly called the Plaza. That land goes toward beautifying 
and upbuilding the District of Columbia. 

This committee must, under this language, find the amount of money that the 
United States, out of her own purse, has paid for the Plaza property; that you must 
report to offset any surplus that the District may be claiming; and upon that you 
must report 3 per cent interest. 

Then the piece of ground that the United States Government has built in the Poto¬ 
mac River must also be accounted for likewise, because it is in the District of Colum¬ 
bia and goes to upbuild and beautify the District of Columbia, and it is in the District, 
because the line between Virginia and the District of Columbia is high-water mark 
on the Virginia side. 

There are any number of items which I could enumerate but which it is the duty 
of this committee to find, and ascertain their cost where they have been paid for 
by the United States, and to offset that cost, plus 3 per cent interest, against any 
surplus. 

The Chairman. Have you concluded that specific subject? 

Representative Johnson of Kentucky. Yes. 

The Chairman. Then I would like to ask what your idea would be with reference 
to the building of the Washington Monument? 

Representative Johnson of Kentucky. If it had been built since 1874; oh, yes. 

The Chairman. We will drop that. Take the Congressional Library; would that 
be in the same case? 

Representative Johnson of Kentucky. 1 think that a mooted question, because 
the language in this bill makes an exception of property used exclusively by the 
United States for its purposes. 

The Chairman. Rut is it so used? Is it not used by the residents of the District? 

Representative Johnson of Kentucky. It is not; and if you want my opinion, it is 
my unqualified opinion that the cost of the Congressional Idbrary and everything in 
it, and 3 per cent interest, must be offset against any claim of surplus. This language 
is mighty plain. Senator, when you come to read it carefully. 

The Chairman. With reference to the Potomac Park to which you called atten¬ 
tion, how about the reclaimed land? 

Representative Johnson of Kentucky. What is that? 

The Chairman. The cost of reclaiming the land down to the low-water mark. 

Representative Johnson of Kentucky. If it upbuilds and beautifies the District of 
Columbia. 

The Chairman. Now, with reference to the Anacostia lands, where large amounts 
are being expended annually? 

Representative Johnson of Kentucky. It is to be treated, under the provisions of 
this act, in exactly the same way, because it upbuilds and .beautifies the District of 
Columbia. It is now being paid under the 00-40 plan, I think. 

There is another thing. The present auditor of the District of Columbia, Mr. Dono¬ 
van, so the papers say, had something to say about the water system. He said that 
the United States Government had never paid any water rent. Now, he might just 
as well have said that the United States Government had never paid any rent for the 
Capitol Ruilding in which we are. The United States Government built the water 
system out of its own purse. I have never gone into the subject thoroughly, but I 
know that as a general statement that is correct. ^ 

Mr. Donovan says that the District of Columbia paid something like ^800,000 tor 
the building of a tunnel through which the water passes from Georgetown to the 
District, to old Washington, or from old Washington to Georgetown, I am not sure 
which. 


208 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Even if that be true, the main water system was built by the United States, and 
belongs to the United States. Now, why should the United States pay water rent 
for its own plant? 

The Chairman. My understanding of the water system would be the intake, the 
conduits leading to the Delacarlia Reservoir, the conduits under the Conduit Road 
to the District line, the settling basins there, the main lines to the reservoirs and 
filtration plant and the filtration plant over in the center of the city, and the distribut¬ 
ing lines. Is it your understanding that all of that money was expended by the 
United States Government which paid for those things? 

Representative Johnson of Kentucky. Yes; for this reason, that the United States 
Government built the original plant and paid for it out of its purse. The laying of 
the water pipes and the mains throughout the District of Columbia has been done 
with the water rentals collected from the people. The government of the District 
of Columbia has paid nothing except perhaps the amount which Mr. Donovan says 
that it spent toward the tunnel. 

Now he suggests—so the newspaper said—that the United States Government had 
never paid any water rent. In the first place, why should the United States pay 
for its own water, bought for its own use, by its own money, unaided by anybody 
else’s money? 

In the next place, he said nothing about the Municipal Building, the District 
courts, the District schools, the District power house, and all getting their water for 
nothing. 

Go out here into the free park and you will see not one but a number of running 
streams of water day and night, through the system belonging to the United Stat.es. 

Under this language the District of Columbia must account for and pay for the 
water that they use, because under the language of the bill it goes to the conveniences, 
comforts, and necessities of the people of the District of Columbia. 

The Chairman. Then I presume when you drafted that language you must have 
been aware of the fact that the total amount which had been expended within the 
District limits for the purposes enumerated, beautifying and furnishing conven¬ 
iences— 

Representative Johnson of Kentucky. That is what the local people here claim 
that the United States should do, that it should upbuild and beautify the District of 
Columbia, the Nation’s Capital. 

The Chairman (continuing). If carried out and ascertained, in line with the 
statement that you are now making- 

Representative Johnson of Kentucky. And I am stating what I think the law pro¬ 
vides, Senator. 

The Chairman (continuing). Would not only more than offset any surplus now 
(daimed by the District, but would impose an indebtedness on the District of perhaps 
$50,000,000 to $100,000,000. 

Representative Johnson of Kentucky. I said to Mr, Donovan recently that I had 
not hunted up these items, so that I could make figures on them, but that I would not 
be surprised, if this resolution were carried out just according to the language of it, if 
you should find that the District of Columbia, instead of having a balance due to it, 
would be indebted to the United States many millions of dollars, and I suggested 
$50,000,000 just as an offhand guess. 

The Chairman. Mr. Johnson, I would like to ask you, as a fellow conferee on that 
bill, if you endeavored to make that intent plain and clear to your fellow members of 
the conference? 

Representative Johnson of Kentucky. Why, certainly. 

The Chairman. I failed to grasp it, for one. 

Representative Johnson of Kentucky. But, Senator, if you failed to grasp it from 
anything that was said, you certainly could not have failed to grasp it if you closely 
studied the language. 

The Chairman. 1 mean 1 failed to grasp it from what was not said; from what was 
not said. 

Representative Johnson of Kentucky. Do you mean by what I did not say, or 
what your fellow conferee of the Senate, Senator Jones, did not say—and he repre¬ 
sented you in this matter? 

The Chairman. I mean both, if it comes to that; yes. I was never given any such 
understanding or even intimation; nor do I acquire it now from the language of the act 
itself; nor do I believe that you could have gotten five votes on the floor of the United 
States Senate to support any such intent or purpose on the part of the Federal Gov¬ 
ernment. 

Representative Johnson of Kentucky. And if the matter had gone before the 
House upon that issue, I do not believe that there would have been five votes against 
it, except those who were under the direct influence of the local lobby. 




IISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF (XILUMBIA. 209 

The Chairman. Well, the coiiimittee here are quite willing to hear the arguments 

and to get all the inionnation you may have to submit in support of your contention, 
as I now understand it. i i j » 

Representative Lv.^ns. I would like to ask some questions on other phases of this 
matter that have not been touched. 

The Chair,man. I merely say that the door is open. I want to give the Congressman 
an opportunity to express his views. 

Representative Johnson of Kentucky. Senator, I have come over here utterly 
un]:Hepared. As I say, I have not read these reports. Rut I am thoroughly familiar 
with the language of the act of Congress under which you are acting. 

The Chairman. If you have nothing further to add along those lines at this time, 
we might proceed. 

Representative Johnson of Kentucky. Oh, certainly, Mr. Chairman. Judge 
Evans says that he has some questions to ask. I do not know whether he wishes to 
ask questions of me or some one else. 

The Chairman. All right. Judge Evans, proceed. 

Representative Evans. When the committee which presented the report that 
covered the period prior to July 1, 1911, presented that report, had they covered all 
of the work that was referred to them? 

Representative Johnson of Kentucky, Do you mean the House District Com¬ 
mittee? 

Representative Evans. The House District Committee. 

Representative Johnson of Kentucky. Having the accountants Mayes and Spald- 
ing? 

Representative Evans. The Mayes and Spalding report. Was it supposed to or 
intended to liquidate all items of difference between the Federal Treasury and the 
District of Columbia? 

Representative Johnson of Kentucky. Most certainly not. 

Representative Evans. What items, if any, were investigated by either the Mayes 
or Mr. Spalding, which were not specifically mentioned, and they directed to investi¬ 
gate, except the single subject of appropriations and disbursements under appro¬ 
priations? 

Representative Johnson of Kentucky. I do not believe I caught your meaning. 

Representative Evans. The Mayes, and subsequent to them, Mr. Spalding, were 
asked to check up the matter of disbursements against the matter of appropriations 
for the period mentioned, were they not? 

Representative Johnson, of Kentucky. For the pu^rposes mentioned; yes. 

Representative Evans, Now, were there any other items investigated by either 
the Mayes or Mr. Spalding except such as were specifically called to their attention? 

Representative Johnson of Kentucky. If they went into the investigation of 
anything except matters to which their attention was specifically invited by the 
House District Committee I am not aware of it. 

Representative Evans. Was that investigation under the control of the District 
Committee? 

Representative Johnson of Kentucky. It was under the control of a subcommittee 
of the District of Columbia Committee. 

Representative Evans. What relation had you to the District Committee and to 
that subcommittee? 

Representative Johnson of Kentucky. I was chairman of the House District Com¬ 
mittee and I was chairman of that subcommittee. 

Representative Evans. Whv was that investigation not completed? 

Representative Johnson of Kentucky. The investigation was stopped by a politi¬ 
cal change that occurred in the House of Representatives, and a new District Com¬ 
mittee being appointed and a new chairman of that committee being appointed. 

Representative Evans. Do you know, either of your own personal knowledge or 
through information ^mu received as chairman of the District Committee, or through 
membership in the Ap])ropriations Committee, of any other items which under the 
act under which this committee is working should be chargeable to the District, 
and with which it has not heretofore been charged; or chargeable to the Federal 
Treasury which have not heretofore been charged? 

Representative Johnson of Kentucky. Mr. Spalding, the accountant, told me 
when the work ceased, or just prior to the time that it ceased, that he knew of other 
items which the District of (Columbia should pay to the United States and which had 

not been paid. , . . ... , ,, . 

When 1 ceased to be chairman of the House District Committee and Mr. Mapes, of 

Michigan became that chairman, I called his attention to Avhat Mr. Spalding had 
said and expressed the hope that he would get authority from the House to continue 
the investigations for the purpose of developing what those items were, ami the 


210 FISCAL DELATIONS BETWEEN U. S. AND DTSTKICT OF COLUMBIA. 


amounts of them; but lie never got the authority from that Congress to go further into 
the matter. 

Representative Evans. Do you know anything about an item of debt. District 
debt, approximating $279,000, which had been made a charge on, 1 think it was, 25 
per cent of the taxes on a certain portion of the District, or all of the District, but 
which said $279,000 was paid, 50-50 by the District and the Federal Treasury, and the 
taxes upon which it was made a charge credited to the District? 

Representative Johnson of Kentucky. At the conclusion of Mr. Spalding’s work 
he said to me, as I have just stated, that he knew of a large amount of money being 
due to the Federal Government from the District of Columbia. I do not recollect that 
he used any figures, but he created the impression upon my mind that it was some¬ 
thing about a quarter of a million dollars, but he never told me what the items were. 

Representative Hardy of Colorado. Due from the United States Government to 
the District? 

Representative Johnson of Kentucky. Due from the District to the Government. 

Representative Hardy of Colorado. I thought you said the other way. 

Representative Johnson of Kentucky. If T reversed it, it was inadvertently. 

Representative Evans. Did you in your investigation, either as a member of the 
committee or personally, become acquainted with a situation by which there was 
certain ground in the District of Columbia valued, as I understand it, at about $7 a 
square foot, which was rented for a market ground at something like $25,000 annual 
rent; and subsequently, because the District was taxing the improvements on that 
ground, the rent was reduced to $7,500 annually, but all of the taxes taken to the credit 
of the District? 

Representative Johnson of Kentucky. I have been quite familiar with the subject 
of the Washington Market Co., which you mention, as the Center Market. 1 prepared 
the bill which was enacted by Congress canceling the lease. 

Congress on May 20, 1870, passed an act leasing certain ground do\yii on Pennsyl¬ 
vania Avenue at Seventh Street, for a period of 99 years, to the Washington Market 
Co. The annual rental was fixed at $25,000. 

In less than a year after the act was passed it deA'eloped that the officers of the 
District of Columbia were the principal stockholders and officers of the Washington 
Market Co., and in less than a year, by a term that I once used upon the floor of the 
House, by a piece of legislative legerdemain those persons secured the passage of an 
act by Congress which reduced that rental from $25,000 a year to $7,500 a year—first 
to $20,000 a year and afterwards to $7,500 a year. They never paid the $25,000 rental 
at all from the time they acquired the property until a year ago when the lease was 
canceled by Congress; notwithstanding the fact that they were renting only a portion 
of that property throughout many years of that lease, either to the District of Co¬ 
lumbia or to the Government, I forget now which—the Federal Government—for 
$14,000 a year. 

Under the terms of the charter or franchise granted by Congress, the rentals were 
to go toward the poor of the District of Columbia. 

The court held that that failed; that it was too indefinite; that the cestuis qui trust 
had failed; and that inasmuch as the money had not gone to them but to the Dis¬ 
trict of Columbia—^—• 

The Chairman. Pardon me a moment; I think perhaps at this point I might throw 
a little light on that adjustment. 

Under the deficiency act approved MaT-ch 4, 1915, for reimbursement, account of 
Washington Market Co., rentals, 1878 to 1914, reimbursed in 1915: 

“Washington Market Co. rentals: For amount due the United States from the 
District of Columbia for collections made on account of the franchise rental of the 
Washington Market Co., fiscal years 1879 to 1914, inclusive, there shall be transferred 
from the revenues of the District of Columbia to the United States the sum of 
$158,4.37.50. such sum being in full settlement of the amount due the United States 
for said market rentals under the decision of the Comptroller of the Treasury, Decem¬ 
ber 2, 1914, and to be covered into the Treasury as miscellaneous receipts.” 

Deficiency act, approved March 4, 1915, 

Representative Johnson of Kentucky. If that were the only law upon the subject. 
Senator, that would be final and conclusive; but Congress has reopened that subject 
by the resolution under which this committee is acting. 

The Chairman. In the one case, where I quoted to you certain language, it was, 
“to further reimburse the United States, and in full. ” " 

It was your opinion that that closed the door as in the case of the 2 per cent interest 
charge? 

Representative Johnson of Kentucky. If Congress had not acted further, that would 
close the door. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 211 

'rhe Chaikman. And in this case, the amount stated being $158,437.50, such sum 

being in full settlement of the amount due the United States, ” you distinguish as 
between those two classes of settlement? 

Representative Johnson of Kentucky. Between that and the matter of interest. 

ihe Chairman. Yes; where interest was fixed at 2 per cent. 

Representative Johnson of Kentucky. I think they are both under the languaofe 
of the act creating this committee. * " 

The Chairman. And are you now inclined to think that this committee should go 
back and where the Government charged the District amounting to $585,000 at an 
interest rate of 2 per cent, it should be reopened, and that rate adjusted so as to make 
the cliarge 3 per cent instead of 2 per cent. 

Representative Johnson of Kentucky. No; 1 had hoped that I had made myself 
clear in saying that special legislation overrides or has precedence over general legis¬ 
lation. I hat is the rule laid down. Wherever Congress fixes the rate at 2 per cent 
that inust continue to obtain unless it is specifically changed; and this 3 per cent 
rate here, in my opinion, is general legislation and the 2 per cent of which you speak 
IS special legislation, and 1 think the special legi lation of 2 per cent obtains. 

The Chairman. Had you concluded your examination, Mr. Evans? 

Representative Evans. No, sir. 

The Chairman. Proceed, then. 

Representative Evans. Do you know anything about property of the United States,' 
owned exclusively by the United States, the rentals of which have been collected 
during the period covered by this resolution or a portion of that period, exclusively 
by the District or credited to the District alone? 

Representative Johnson of Kentucky. Can you invite my attention, Judge Evans? 

Representative Evans. I think the wharves were such properties. 

Representative Johnson of Kentucky. Yes; it is my understanding that the wharves 
are owned by the United States Government and that the District has been getting 
revenue from them. 

Mr. Donovan. All the revenue? No, Mr. Johnson. 

Representative Johnson of Kentucky. I did not say anything of the sort. I said 
getting revenue from them. 

Mr. Donovan. And under a specific act of Congress transferring jurisdiction of the 
wharf properties to the District for renting purposes, and authorizing the District 
to take one half of the rentals, and the other half to be credited to the United States. 

Representative Johnson of Kentucky. It is my recollection that the law to which 
you are referring did not refer in terms to the Seventh Street Wdiarves, and my mind 
had not turned to it until Judge Evans suggested it; but in construing the law under 
which you are acting, my mind did turn to the streets of the District of Columbia. 

The District of Columbia has derived revenue from fruit stands and the like in the 
public streets, and it was my opinion in drafting the resolution and it is my opinion 
now, that this resolution directs this committee to report whatever collections may 
have been made from those sources. 

Mr. Donovan. We receive no rental, Mr. Chairman, for fruit stands, and stands 
of that kind. The District receives no rental for them. 

Representative Johnson of Kentucky. It did not under the word “rent”; but 
you did receive revenue under licenses, licensing them to operate in the streets. 

Mr. Donovan. Have 3 ou reference to the question of vault rentals? 

Representative Johnson of Kentucky. I had forgotten vault rentals, but since you 
suggest it, 1 do include rentals from vaults which run out under the street. But 1 
also had in mind every business that was conducted in the street. 

Mr. Donavan. We give them a peddler’s license. 

Representative Johnson of Kentucky. Because the United States collected either 
a rental, or a rental in the way of a license. 

The Chairman. Congressman Johnson, I direct your attention to the act of 1878, 
which is commonly termed the organic act or law, the quotation being this. (Reading): 

“To the extent to which Congress shall approve of said estimates. Congress shall 
appropriate the amount of 50 per centum thereof, and the remaining 50 per centum 
of such approved estimates shall be levied and assessed upon the taxable property 
and privileges in said District other than the property of the United States and the 
District of Columbia.” 

Representative Johnson of Kentucky. What about it, Senator? 

The Chairman. I am simply wishing to refresh your recollection as to the act of 
1878, under which appropriations have been made and under which receipts from 
taxations, rentals, and privileges have been derived. 

Representative Johnson of Kentucky. 1 fail to see any direct bearing on the sub¬ 
ject. 


212 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA 


The Chairman. My point being that among the revenues which the District was 
permitted to receive and to use in paying its contribution to the upkeep of the District 
government, privileges were expressly included. 

Representative Johnson of Kentucky. My interpretation of the language which 
you have just read is not that that was an authorization to make use of the property 
of the United States. The District’s authority to make use of the property of the 
United States came by a later act. What is the date of that act, 1902? Under that 
act rentals from projierty owned by the United States should go to the District of 
Columbia. 

Mr. Donovan. Are you speaking now about the wharf property? 

Re])resentative Johnson of Kentucky. Yes. 

Mr. Donovan. We have so many items making up the District revenues; but in 
tlie early nineteen hundreds- 

Representative Johnson of Kentucky. 1902, was it not? 

Mr. Donovan. About that time; yes. 

Representative Johnson of Kentucky. Now, there was an act jiassed in 1902, or 
thereabouts, to which you have just heard reference made by the colloquy between 
Mr. Donovan, the Auditor for the District, and myself, which gave to the District of 
Columbia certain rentals or income from the United States Government property. 

In opening up the broad field that this resolution does, of ascertaining what the 
District of Columbia has done for itself and what the United States Government has 
done for the District of Columbia, that must be included. 

The Chairman. Have you any further questions. Congressman Evans? 

Representative Evans. No; I think I have covered what I had in mind. 

The Chairman. Congressman Johnson, under date of May 9, 1914, the accounta’its, 
C. Scott Mayes and J. R. Mayes, submitted a report of their audit, subsequent to 
which the subcommittee of the House Committee on the District of Columbia, ap¬ 
pointed under House Resolutions 154 and 200 of the Sixty-second Congress, and House 
Resolution No. 203 of the Sixty-third Congress, submitted the following report to the 
House. I will read this hurriedly and it can be printed in the record. [Reading:] 

“Acting under House Resolutions No. 154 and No. 200 adopted during the Sixty- 
second Congress, and House Resolution No. 203, adopted by the Sixty-third Congress, 
the chairman of the House Committee on the District of Columbia appointed Repre¬ 
sentatives A. H. Walters, T. H. Caraway, J. R. Thompson, S. E. Prouty, and Johnson 
of Kentucky as a subcommittee to conduct the investigation and inquiries provided 
for in said resolutions. 

“When the subcommittee met and organized, Mr. Johnson of Kentucky was chosen 
as chairman of the subcommittee. By proper resolutions the chairman was authorized 
to select accountants and stenographers for the purposes set out in said resolutions. 
He thereupon selected Mr. T. Scott Mayes and J. R. Mayes as accountants. 

“On February 26, 1915, a finished report was submitted to the subcommittee by the 
accountants, by which report it is shown that the District of Columbia is indebted to 
the United States in the sum of $461,508.06 on account of errors in stating what is 
known as the ‘general account’ between the United States and the District of 
Columbia. 

“This amount of $461,508.06 consists of two items, viz: One item of $221,971.20, the 
net amount chargeable to the District of Columbia on account of loans and errors in the 
general account, exclusive of any interest on said loans and errors; and another item 
of $239,536.86, which is the net amount chargeable to the District of Columbia on 
account of interest. 

“The loans and errors in the general account, as well as the items of interest, are all 
set out in detail and fully explained in the report of the accountants, which report is 
made a part hereof. 

“All of which is respectfully submitted to the House. 

“Ben Johnson, Chainiion. 

“A. H. Walters. 

“T. H. Caraway. 

“J. B. Thompson. 

“S. F. Prouty.” 

A reference to the statement containing the detail making up the gross sum referred 
to, shows two loans to the District of Columbia of $75,000 each, under different dates. 

Representative Johnson of Kentucky. Will you read that. Senator, to refresh mv 
recollection? 

The Chairman. $75,000 on account of the loan to the District of Columbia authorized 
by the act of March 3, 1877. The other, on account of loan to the District of Columbia 
authorized by the act of March 3, 1877, and April 30, 1878. Also an item on account 
of loan to the District of Columbia authorized by the act of March 3, 1875, $50,865. 



FI sc AL R El. AT 10 XS 


BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


213 


1 am infonued that those three items were charged to tlie District of Coluinbia. 

^1 vopiesentative Johnson of Is.eiitiicky. lly act of Congress. 

Ur of Congress: and in making those charges the Congress did 

not direct that the charges of interest be set up on these three items and otlier items 
winch seem to be balances in current account. Therefore, while the interest rate 
usen in the coniputation was 2 per cent throughout, no charge for interest was made. 

Kepresentative J ohnson of Kentucky. Now, as to the question as to whether or not 
tins committee is to find interest on those payments of principal, it depends upon this 
language of the law under which you are acting: 

And in e\ ent any money may be, or at any time has been, liv Congress or other¬ 
wise, found due ”- ' 

The Chairman. Yes. 

Representative Johnson of Kentucky (continuing reading): 

either legally or morally, from the one to the other, on account of loans, advance- 
ments^or improvements made, upon which interest has not been paid by either to 
the other, then such sums as have been or may be found due from one to the other, shall 
be considered as bearing interest at the rate of 3 per centum per annum from the time 
when the principal shall either legally or morallv have been paid until actuallv 
paid.” 

So that you have just read items which liave been found by Congress to be due, 
and which have been paid, and you are directed by the law "under which you are 
acting to ascertain interest at the rate of 3 per cent upon those items and report that 
amount. 

Mr. Galloway. The law exempts items upon which interest has been paid. 

Representative Johnson of Kentucky. I do not know that I know just what you 
mean by that. 

Mr. Galloway. The law says here: “Upon which interest has not been paid bv 
■either to the other.” 

The law specifically exempts those items. 

The Chairman. The 2 per cent was not charged in this case. 

Mr. Galloway. He was arguing awhile ago in the absence of consideration of that 
clause, and I just wanted to call attention to that provision. 

Representative Johnson of Kentucky. I do not believe that I get you yet. 

Mr. Galloway. The law specifically provides that where interest has been calcu¬ 
lated and paid, regardless of what rate, no further consideration should be given to 
interest upon that item. 

Representative Johnson of Kentucky. There is no law, under which this com¬ 
mittee is acting, directing them to charge interest twice on anything. 

Mr. Galloway. No; regardless of the rate. 

Representative Johnson of Kentucky. Regradless of the rate. 

The Chairman. The language used in your report, as you will notice, states that 
the report submitted to the committee by the accountants was a finished report. 

Representative Johnson of Kentucky. Subsequent events clearly showed that it 
was not a finished investigation of the affairs between the District of Columbia and 
the United States, because subsequent to that date the matters were further gone into 
and additional amounts were found to be due the United States from the District. 

Representative Hardy of Colorado. Mr. Johnson, perhaps this is a little irrelevant, 
but if it took three years for your subcommittee to get these matters formulated in 
that way and make this unfinished report, how did you, writing that paragraph, ever 
imagine that this committee could make a full report for 50 years back in a few months? 

Representative Johnson of Kentucky. I never imagined that it could be done in a 
few months, and as to the time fixed for the committee to report, it was the time fixed 
by the Senate end of the conference. 

The Chairman. My recollection does not agree with that. My recollection is that 
the clause as now written into the law, and which has been referred to here several 
times this morning, was a write-up submitted by the House conferees, and that the 
Senate conferees acceded to it. 

Representative Johnson of Kentucky. The Senate conferees insisted upon an 
earlier date than that which is fixed by the resolution. The House conferees suc¬ 
ceeded in prolonging that date to the date fixed in the present law. Now, it was never 
my thought that all these accounts from 1874 until now could be gone into and over¬ 
hauled; but 1 believe this, and I believe now that you can take the principal items 
that the United States has paid for out of its own purse for the upbuilding and beauti¬ 
fication of the District of Columbia, and that you can take what the government of the 
District of Columbia itself has done, and that you can cover those very quickly and 
very conclusively. 

The Chairman. Do you think it would be advisable to employ accountants to check 
the various items of appropriations carried in the annual bills from 1878, say, down 



214 FISCAL RELATIONS BP:TWEEN U. S. AND DISTRICT OF COLUMBIA. 


to 1911, even if the records are available? Would that, in your judgment, disclose 
any errors or inaccuracies that would justify the expenditure for auditors’ work? 

Representative Johnson of Kentucky. I have no knowledge upon which to base 
an opinion as to whether or not the accounts between the District of Columbia and 
the United States have been kept without error. It would be my guess, judging from 
the fact that they had to be dealt with by human beings, that there are many errors 
in them. But I do not believe that to deal with errors alone in the accounts would 
be justified. But we have large outstanding matters, such as the Potomac Park, the 
Lincoln Memorial, and the water system, and things of that kind, that can be gone 
into very quickly. 

(At this point the chairman left the committee room, and the chair was a'^siimed 
by Representative Hardy of Colorado.) 

Representative Hardy of Colorado (in the chair). Speaking as a member of the 
committee rather than as chairman, it has been my view that this audit should be 
made very simple from July, 1911, up to date; that we should take into consideration 
this Mayes report, and we should take, in addition, anything that is to be brought 
to the attention of this committee by men like yourself and others, and I have been 
hoping and urging that those things would be brought to the attention of this com¬ 
mittee. For instance, 1 do not know whether Congressman Evans brought out the 
question fully or not, but I was going to ask you myself if between those years, 1874 
and 1911, you could suggest anything else that might be called to our attention as 
between the items that the Government owed the District or that the District owed 
the Government—those items. 

Representative Johnson of Kentucky. In the first place, I see no well-founded 
reason why we should take 1911 as a starting point, for the reason, as I have just stated, 
that the inquiry made by Mayes and Spalding into the accounts between the United 
States and the District of Columbia, was never intended to be such a one as to deal 
with the whole account, because it was considered too big a job; just as I now regard 
it as too big a job. But there are, as 1 have said once or twice, large outstanding 
matters. They are so large that thev are glaring, under the language of the act under 
which this committee is sitting, so that they can not be ignored; and those which are 
readily accessible and which can be obtained without very much trouble, beyond all 
sort of question should be used in a report made by this committee. 

Representative Hardy of Colorado. Those are the very items we would like to have 
brought to our attention. 

Representative Johnson of Kentucky. It is the duty of your accountants to find 
those items. 

Representative Hardy of Colorado. That would take seven years of detailed ex¬ 
amination. 

Representative Johnson of Kentucky. No; I do not think so. You can take the 
appropriation bills and run through them very quickly. 

Now, if I might say, it was my thought upon the adjournment of the last session of 
the Congress in July, that this committee would then—at least then if not before— 
proceed hurriedly vdth the work through accountants who would find big things 
rather than look for little things; and as it was then my thought that the work would 
then immediately proceed, and having heard that the Speaker of the House contem¬ 
plated—whether it is true or not—putting me upon this committee, I asked him not 
to put me upon the committee; that the people here had been so falsely taught to 
believe, by the press, that I was prejudiced toward them, that I preferred not to sit; 
and I preferred also that this report be made by those regarded as their friends rather 
than by any one person on it that they regarded as an enemy. I took occasion to say 
once upon the floor of the House that 1 was neither a friend nor an enemy of the Dis¬ 
trict of Columbia. 

The Chairman. I do not think that anyone is justified in intimating that there is 
any bias of mind on the part of any member of this special committee, one way or the 
other. 

Representative Johnson of Kentucky. If I have created that impression by any¬ 
thing that I have said, 1 want to withdraw it. That was not my intention. 

The Chairman. I know that you did not mean it in that way. 

Representative Johnson of Kentucky. If you will pardon me now, I want to say 
of the local press, and those that the local press regards as their friends rather than 
their enemies; 1 do not suppose that anv' man has ever put foot into the District of 
(’olumbia who has been lied upon to the extent that I have been, and all for the 
purpose of destroidng any influence that I might have or might ever acquire with 
Congress. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 215 


Now, only the other day there occurred a trifling matter, which is only one of 
hundreds of instances of attempts to prejudice Congress and the people here against 
me. There was an article in the Star the other day stating about some policeman 
fooling with someone’s automobile out here in front of the Capitol, and that he was 
getting the color of various State licenses, and that I ran out and wanted to know what 
in the dash, dash he was fooling with my automobile for. Now, I have no automobile 
here, and I never heard of the incident until I read it in the Star. The whole thing is 
a fabrication. 

Upon another occasion the Washington Post published a statement that some boys 
had come to my office and had buncoed me out of a dollar or two; that I had had them 
arrested, and that I appeared in the police court and had testified against them; and 
in quotation marks it gave my testimony. And in addition to that it stated that as 1 
left the court room I went up to the judge’s bench and had some words with the judge; 
and, before God, no such thing ever occurred. The whole thing was a lie from begin¬ 
ning to end. They have told a hundred lies against me just like that, to prejudice 
the Congress and to prejudice the people of the District against me. 

The Chairman. Mr. Congressman, you are probably not familiar with the pro¬ 
cedure followed by this committee. 

Representative Johnson of Kentucky. I am entirely ignorant of it. 

The Chairman, The act authorizing this committee, I believe, was signed on June 
29, 1922. The first meeting of this committee was held on July 1. The auditors were 
appointed some time during the month of July, Haskins & Sells, as you know, being 
selected. 

The work of those auditors has been carried on constantly and as assiduously as it 
was found possible for them to work. 

We conferred. We had them in here and discussed the most effective plans of 
procedure. We questioned them very closely to ascertain, and in conference with 
the representatives of the Comptroller General’s office and the auditor of the District 
and the representative of the Treasury Department, as to the records, their acces¬ 
sibility, how the work of audit could be carried on to best advantage; whether it was 
better to have two sets of two auditors each; that is to say, a lead man and a helper, 
working on certain work in one place, and two others working in another place, or 
whether we could add another pair or two; and we adopted the plan that was unani¬ 
mously thought to be the most efficient plan of procedure, and no time whatever has 
been lost. 

We established the date of July 1, 1911, and instructed the auditors to carry on the 
work from that point up to July 1, 1922, initially, so that this committee might de¬ 
termine later whether or not it was advisable to go back and perform the same work 
over the previous years. 

Now, the report of the auditors, as far as disclosing errors in charging and crediting 
accounts, and the various items for those 11 years, discloses about $650, in round 
figures, in one case, and $635 in another case, and the two practically offset each other, 
or almost, because one is a charge against the Federal Government and the other is a 
charge against the District. 

In the light of that, and in the knowledge of the fact that the accounts were stated 
annually as to the charges and credits, under appropriation bill items, there is a feeling, 
I think, perhaps general, on the part of the committee—I do not know that they all 
share it, but I think you have taken perhaps the same view—that to perform that 
same class of work, as to accounts for the earlier years, from 1878 up to 1911, would not 
be justifiable. 

If you think that the items which are not directly dealt with as appropriations are 
the ones that should be given consideration- 

Representative Johnson of Kentucky. I am inclined to that opinion. 

The Chairman (continuing). Now, that we attempted to coyer in every way, 
calling the auditors’ attention to any information that had come into the possession 
of myself or other members of the committee, as to questions that had been in dispute 
as between the District of Columbia and the Federal Government or regarding which 
question had been raised, and those are the items upon which Haskins & Sells have 
reported. They called attention to quite a number of them. This committee has 
endeavored to get and ascertain the views of the representatives of the various Govern¬ 
ment departments on those items. 

Representative Johnson of Kentucky. I have not seen the report. Senator, filed 
bv the accountants. 

*^The Chairman. As 1 say, it was of course printed and is a matter of public informa¬ 
tion. It was immediately given out, as soon as this committee had had an oppor¬ 
tunity to look over the Haskins & Sells report; before we had time to digest it, so to 
speak, it was released and printed in the public press. 


216 FISCAL RELATrONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Johnson of Kentucky, I left the JJistrict of Columbia on the 3d 
day of last July and, excepting one day in the meantime, I was not back here until 
the 13th day of December, and during that time 1 was a subscriber to the Washington 
Star, but during a large part of that time I was sick in bed, and in addition to that 1 
was at a watering place, and in addition to that, too, I was away from home necessarily 
for several rather lengthy periods of time, and I did not get the Washington Star; and, 
consequently, 1 have not been familiar with what has been going on in this committee. 

But you spoke of some items that the accountants had reported upon. May I 
inquire whether or not in their report there are any items of large amounts that the 
United States Government has expended money in, maintaining, upbuilding, or 
beautifying, etc.? 

The Chairman. Yes; 1 think there are. Here is one item, or rather here is one 
heading embracing and including two items, appropriations of $80,000 and of $2,500, 
for the purchase of land in connection with the National Zoological Park. They 
raised a question regarding it. They submitted it without recommendation. The 
District auditor believes that the decision should be left to the committee. 

dKe representative of the General Accounting (Office believes that 60 per cent of 
the cost of the land should be charged to the District of Columbia. 

The representative of the Department of Justice believes that the question has 
been legally settled by the Congress; in other words, that no charge should be 
made. 

Representative Johnson of Kentucky. And, in other words, that the present act of 
Congress is null and void? 

The Chairman. The citizens’ joint committee believes that the District should not 
be charged. 

Then there is the question of the Army officers’ pay and allowances. Those Army 
officers are appointed by the Government, and their salaries have been ascertained 
by the auditors. Of course, they had to go outside of the appropriation bills to ascer¬ 
tain that. 

Representative Johnson of Kentucky. That is one item to which my mind has not 
heretofore turned. 

The Chairman. The auditors make no recommendation. 

The District auditor says that Congress has never required the District to participate 
in such expenditures. 

Representative Johnson of Kentucky. This law, however, under which your com¬ 
mittee is sitting, does require the taking into consideration of those items. 

The Chairman. As I have before said, that is a matter of opinion and interpreta¬ 
tion of the act. 

Representative Hardy of Colorado. The committee have taken account of them. 

The Chairman. We are taking account of them just the same. 

Representative Hardy of Colorado. It is in the report of the auditors. 

Representative Johnson of Kentucky. Yes. 

The Chairman. The representative of the joint accounting office expresses his 
inability to make any recommendation. 

The representative of the Department of Justice states that the question has been 
legally settled, and on that he gives his reasons, of course, at length; he goes into 
detail on the question. 

Representative Johnson of Kentucky. And he thereby repeals this act. 

Mr. Galloway. May I interrupt there? 

The Chairman. I think the answer represents the Department of Justice. It is 
not only the individual expression of Mr. Galloway, their representative, but he has 
taken into consideration the act under which Ave are operating. 

Mr. Galloway. May I suggest there, Mr. Chairman, that I do not undertake to 
discuss the moral side of the questions, but only the legal side of the questions, 
because- 

Representative Johnson of Kentucky. And you ignore the present legislation? 

Mr. Galloway. No; not at all. 

The Chairman. The citizens’ joint committee claims that nothing is due by the 
District on this account, and on the question of increased compensation, which was 
the bonus paid the District employees and that was submitted for consideration by 
the auditors. 

The District auditor says the committee should decide. 

The representative of the General Accounting Office claims that the amount, 
$192,000, should be now charged against the District. 

The Department of Justice says that there would seem to be no violation of law 
in the way the charge was made. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 217 


Ihe citizei^’ joint committee makes no recommendation; and 1 will say in that 
connection that Mr. Colladay was selected by the various city organizations as their 
lepiesentative, with full power to act for them and express their views. 

On the 5 per cent bonds under the $1,200,000 authorization which you will remem¬ 
ber was supplemental to the 3.65 bonds authorization of $15,000,000, the auditors 
recommend that the District be charged with the amounts paid by the Government 
on account of interest and redemption of these bonds. 

The District auditor makes no specific recommendation, but refers to the fact that 
only appropriations of amounts during the existence of these bonds provided for pav- 
ment of interest and return. The representative of the General Accountino' Office 
makes no recommendation. He leaves it to the committee. 

The representatives of the Department of Justice claims that the question has been 
legally settled. 

T^e joint committee of citizens says that Congress ignored conditions in the act 
authorizing the issuance of these bonds, by subsequently appropriating for interest 
and sinking fund. 


The errors in accounts, as 1 have stated, are very small, indeed. Ilere is an item 
where certain collections were made by the clerk of the Supreme Court of the District 
of ('Olumbia. 


The auditors submitted that to us, the amount being $175,870.99. That was col¬ 
lected by the clerk of the Supreme Court of the District of Columbia and turned into 
the Federal Treasury, and the District of Columbia accorded no share of that, although 
it participates in the salaries and the running expenses of that court; and I will say 
provides the building and its improvement, and all of that. 

Mr. Taggart. Senator, If you will allow me to interrupt, the salary of the clerk 
was paid out of United States appropriation, but the salaries of the other employees 
of the court were paid 60—40. 

The Chairman. The representative of the General Accounting Office recommends 
apportionment between the United States and the District of Columbia of collections 
subsequent to June 30, 1922, the amount set up by the law prior to 1922. 

Representative Evans. I think that is covered by the law. 

The Chairman. The representative of the Department of Justice makes no recom¬ 
mendation. 

The representative of the citizens’ joint committee makes no recommendation. 

The District auditor claims that the District has a clear equity in these collections. 

Mr. Taggart. There is one particular thing that impressed me in that connection, 
and that is that the United States Government gets everything that is paid in for mar¬ 
riage licenses in the District of Columbia. That appeals to me as rather humorous. 

Representative Johnson of Kentucky. I notice. Senator, that there is nothing in 
the paper from which you have just read, that takes into consideration any money 
expended by the United States in upbuilding or beautifying the District of Columbia. 
I mean the Lincoln Memorial and Potomac Park, and the separate expenditures 
made by the District of Columbia for various and divers other purposes, some of which 
I have mentioned, while under the language of the act this committee must consider 
everything of that character, except that the act provides in the following language: 

“Neither the cost of construction nor of maintenance of any building erected or 
owned by the United States for the purpose of transacting therein the business of the 
Government of the United States shall be considered by said committee.” 

It was my contention that the law is very plain that the committee must consider 
every expenditure made by the United States Government in upbuilding and beauti¬ 
fying the District of Columbia, except the buildings wherein the United States Gov¬ 
ernment transacts its own business exclusively. 

The Chairman. For your information I want to state that that point has been up 
for discussion before this committee. It has had consideration, whether or not that was 


contemplated. 

As to the Potomac Park, from your statement all of the property included in the so- 
called Potomac Park was paid for by and belongs to the United States Government. 

Representative Johnson of Kentucky. That is for your accountants to find out, 
whether it was or not, and the extent to which the United States did pay for it must 
be taken into account. 

The Chairman. Now, assuming that that is correct; the upkeep and all that has 
been annually divided between the District and the lederal Government, has it not? 

Representative Johnson of Kentucky. That is my understanding. It is the original 
cost that I am talking about and the interest on the original cost. 

The Chairman. Are you familiar with the manner in which the control of this was 
originally acquired by the Government? 

Representative JoHNSOisi>of Kentucky. The control of the District!* 

The Chairman. Yes. 


32894—S. Doc. 301, 67-4 


15 



218 FISCAL RELATIONS BETWEEN V. S. AND DISTRICT OF COLUMBIA. 


Representative Johnson of Kentucky, The United States Government never 
acquired anything except jurisdiction over it. 

The Chairman. Yes, 

Representative Johnson of Kentucky. Ori^nally there were 19 farmers who owned 
what was then termed the old City of Washington, that is from the river north to 
Florida Avenue, which was a road leading from Rock Creek around to the Potomac 
branch. I am thoroughly familiar wdth the whole history of it, and if there is any par¬ 
ticular thing that you wish to bring out about it, I will be very glad to tell you about it. 

The Chairman. I am asking for information. Take it at the date when the United 
States Government practically took over the District Government. 

Representative Johnson of Kentucky. No; the United States did not takeover the 
District government in 1878, if it had ever taken it over at all. But under the Con¬ 
stitution you know that Congress had the exclusive authority to legislate for the 
District. That is the extent to which it had been taken over. It was acquired under 
the act of July, 1790—the District was—and from the beginning the United States has 
had legislative jurisdiction over it. 

The Chairman. Do you see anything under this act, under your interpretation of it, 
under which this committee is operating, that requires this committee to take cog¬ 
nizance of transactions prior to July 1, 1874? 

Representative Johnson of Kentucky. No. 

The Chairman. Then the acquisition of the Potomac Park property since July 1, 
1874, would be the ones you have in mind, would they? 

Representative Johnson of Kentucky. I have never used the word “acquisitions.” 
I mean the money expended by the United States on the Potomac Park property 
toward upbuilding and beautifying the District of Columbia. 

Representative Wright. Does that include the Speedway? 

Representative Johnson of Kentucky. Certainly. 

The Chairman. Have you any reason to believe that those expenditures for upkeep 
and beautification have not been annually charged under the appropriation bills pro¬ 
portionately? 

Representative Johnson of Kentucky. I have reason to believe, and I think 
abundant reason to believe, that the expenditure for the upbuilding and beautifica¬ 
tion of Potomac Park has come largely out of the purse of the United States instead 
of largely, partly, out of that of the District of Columbia. 

The Chairman. Do you feel that the Federal Government is fully justified in impos¬ 
ing upon the District of Columbia one-half the cost of the so-called Key Bridge? 

Representative Johnson of Kentucky. I should say so, beyond question. It is 
entirely within the District of Columbia. 

The Chairman. Yes, 

Representative Johnson of Kentucky. It is under the language of the act under 
which you are sitting, for the necessity and convenience of the people of the District 
of Columbia, and for the upbuilding and beautification of the District. It comes 
under all those heads. 

The Chairman. How about the residents of Virginia? 

Representative Johnson of Kentucky. The bridge is not in Virginia. 

The Chairman. No; it is not in Virginia; but would it have been erected had it 
not been for the fact that large numbers of citizens of Virginia live at one end of the 
bridge? 

Representative Johnson of Kentucky. Well, I do not think anybody can say with 
any degree of accuracy as to that; but it is absolutely certain, in my judgment, that 
the merchants and every business man in the District of Columbia would admit 
that it is to his advantage to fix it so that the people can come from Virginia into the 
District of Columbia and trade. 

The Chairman. Yes. 

Representative Johnson of Kentucky. That it enchances the value of the surround¬ 
ing property by building a handsome, ornamental bridge, instead of a plain, useful 
one. 

Representative Hardy of Colorado. Is it your view that under this act this com¬ 
mittee is required to inquire into and report on these various items, or is it your view 
that this act cancels all past negotiations and reenacts anew, and that the cost would 
be divided up on this basis that you suggest? 

Representative Johnson of Kentucky. I have suggested no basis. I think that 
the act is plain and mandatory, that in determining what the government of the 
District of Columbia has done for the District of Columbia and what the United States 
Government has done for the District of Columbia, those expenditures must be ascer¬ 
tained and reported. 


FISCAL EELATIOXS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


219 


I wlXd to wj»t You mean ascertained and reported; but what 

diTe t^mh Just q uestion as regarding the interest on the balance found 

Kentucky. I have never spoken of a balance due I 
have spoken of different amounts found due, but the term “balance” would imply 

stlted 1110^^ f accounte between the two, and I have specificaHv 

staged, 1 nope, that I never understood that that accounting was settled. 

Colorado. You say that this committee should report 
interest should be, and that the interest should be paid; or do you intirnate 
that this act we keep on reciting here settles that, and that it should be^paid? 
Representative Johnson of Kentucky. I do not know that I have just gotten you* 

as Senator Phipps indicated, that when an act of Congress 
collecting the principal said that that was in full, my contention is that this present 
law inquirmg into the legal rights and the equities of the two concerned, the District 
of Columbia and the United States Government, is wide open. 

Representative Hardy of Colorado. No; what I am trying to get at is this—— 
Representative Johnson of Kentucky (continuing). And that this law controls 
until it IS superseded by another act of Congress. 

Representative Hardy of Colorado. What I am trying to get at is this, that on that 
balance that was settled here, we assumed, in 1907, you claim that we should report 
interest on that up to date? 

Representative Johnson of Kentucky. Not on any balance. I decline to treat of 
any balance. 


Representative Hardy of Colorado. All right; 1 will call it the item, then. 
Representative Johnson of Kentucky. But where Congress has found that the 
District of Columbia owed the United States specific sums of money, and the principal 
of those sums has been paid, that this committee is compelled to report 3 per cent 
interest on those amounts. 

Representative Hardy of Colorado. Do you think that this act declares that interest 
due, or is it for the Congress of the United States to decide whether it is due or not 
after it reads this report? ^ 

Representative Johnson of Kentucky. If I understand the proper function of your 
committee, it is to find the naked fact that on a certain day the District of Columbia 
was compelled by Congress to pay a particular amount, and upon another date it was 
compelled to pay to the United States Government another particular amount; that 
it is your duty to report that fact, to state those amounts and then, after your mention,, 
compute straight 3 per cent interest on those amounts from the date on which the 
principal should have been paid until actually paid. 

Representative Hardy of Colorado. You do not answer my question. It is this. 
Should Congress determine the fact, or does this act settle the fact that it is due? 

Representative Johnson of Kentucky. You can not get the amount of the interest 
without computing. 

Representative Hardy of Colorado. Yes. 

The Chairman. But when it has been computed and the figures are submitted in a 
report, does the penalty attach? 

Representative Johnson of Kentucky. Is it the interest you call a penalty? 

The Chairman. Yes; without further act of Congress. 

Representative Johnson of Kentucky. I donottlunk so. I think if you file a report 
that report just stands as an incomplete act, and then some bill or resolution would 
have to be introduced in and passed by Congress to carry your report into effect. Or, 
in other words, the Congress can not, by your report, be compelled—I mean the Dis¬ 
trict of Columbia can not be compelled—to pay any of these amounts, whether for the 
Lincoln Memorial or the Potomac Park or the Plaza or the water or anything else. 

The Chairman. Then your idea is that this report should merely show these items 
and let the future Congress decide whether they should be settled or not settled ? 

Representative Johnson of Kentucky. The present Congress or a future Congress, 
My conception of the whole situation is that you report nothing but the facts. 

Representative Wright. In other words, what this special committee would report 
would be for the information of the House and the Senate? 

Representative Johnson of Kentucky. That is all. If this committee never reports, 
the collecting of more money would be in the same attitude by their failure to report 
as it would be by their reporting without additional legislation. 

Representative Hardy of Colorado. While it has been intimated several times that 
Congress made settlement in full, yet that is repealed by this act? 

Representative Johnson of Kentucky. By positive direction. 

Representative Hardy of Colorado. It repealed the acts and left them unsettled 
again? That is what I was getting at. 




220 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Johnson of Kentucky. Yes. 

The Chairman. Is it within the province of this committee to reopen the 60-40? 

Representative Johnson of Kentucky. No; the 60-40 is established by the same 
act under which you are operatin". 

The Chairman. Yes; but the 60-40 w^as established by direct legislation, although 
it was included in the appropriation bill of June 29. 

Representative Johnson of Kentucky. There w^as nothing in the permanent law 
establishing the 60-40 ratio. 

The Chairman. There w^as a permanent law establishing the 50-50 ratio of 1878. 

Representative Johnson of Kentucky. Yes; but that was overridden by a tem- 
])orary law made from year to year. 

The Chairman. Yes. Now, is it not the duty of this committee to consider w'hether 
those temporary acts should not be review'ed, and then to recommend that the 50-50 
basis be restored for the years 1920, 1921, and 1922, because they were not by direct 
legislative acts? 

Repres mtative Johnson of Kentucky. No; it was the result of direct legislative 
acts, but the result of annual acts instead of by permanent acts. The committee has a 
wdde latitude. It can express its opinion that the 50-50 should be preferable to the 
60-40. But there is nothing in the law under which the committee is sitting that 
authorizes them to go into the proportion which either the District of Columbia or 
the United States should pay toward the upkeep of the District of Columbia. The 
only question is, before this committee, what have the two respectively done; not 
what they should do in the future but what they have done. The permanent law 
of 60-40 is final until it is undone by Congress. 

The Chairman. There is no dispute over that. 

Representative Johnson of Kentucky. Not with me, there is not. 

The Chairman. But the difficulty might arise as to the annual acts for the years 
1920, 1921, and 1922. 

Representative Johnson of Kentucky. If by any annual act appropriations were 
made payable out of the Treasury of either the United States or the District of Co¬ 
lumbia, this committee should take it into account, in my opinion, under the 
direction of this statute under which you are sitting. 

Representative Wright. I should like to hear from Congressmen Johnson about the 
bonds. 

Representative Evans. Do you mean the Georgetowm bonds or the Washington 
bonds? 

Representative Wright. Both. 

Representative Johnson of Kentucky. My inquiiy and investigation into District 
of Columbia matters through the 14 years that I was on the District of Columbia 
Committee went very particularly into the 3.65 bond issue and only incidentally 
or collaterally into the bond issue to which you have just referred. I may be mis¬ 
taken about it, but I have the general impression that when the three municipalities 
here—the city of Georgetown, the city of Washington, and the remainder of the Dis¬ 
trict of Columbia, called the levy court, or the county of W^ashington—were put into 
one, the one municipality of the District of Columbia, there was carried over a sinking 
fund from the old city of Washington into the new municipality of the District of 
Columbia, and that that sinking fund soon became confounded with the sinking fund 
created for the purpose of retiring the 3.65 bonds, the retirement of which will be 
completed next year. 

Representative Evans. Just there, Mr. Johnson: Do you mean it was confounded 
in the books of the Federal Treasury, or do you mean that it was confounded by the 
actions of both Federal Treasury and District authorities? 

Representative Johnson of Kentucky. Without being emphatic—because, as 1 
said, 1 have not gone into it in great detail—I have the impression that the old sinking 
fund, which was bankrupt, went over into another sinking fund, that for the 3.65 
bonds, and was confounded by the District authorities, by paying items out of the 
sinking fund created for the retirement of the 3.65 bonds, without authority, and that 
the Treasury Department seems never to have caught it, but it just ran along until 
this final reckoning comes. 

Representative W^right. You think the District is responsible for the amount the 
Government paid in the retirement of those bonds? 

Representative Johnson of Kentucky. I do not think that it should be undertaken 
by the report of this committee to make the District of Columbia chargeable with the 
half paid by the United States since the 1st of July, 1878. I did differ, and I continue 
to differ, with the then comptroller, who decided that the United States was not 
liable for any part of the 3.65 bonds from 1874 until 1878 when the half and half law 
was enacted. But I have acquiesced in his opinion to the effect that if Congress 


HSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 221 


appropnated each year for the creation of that sinking fund, it should just as well be 
et alone and let go at that, although the comptroller in his opinion says that originally 
tne United States was nothing except a guarantor of the 3.65 bonds. He made that 
quite plain and quite clear, that the United States was not the payee of those bonds 
to any extent, but that the United States was simply a guarantor of them; that the 
U nited States pledged its faith to see that a sufficient tax was levied to pay those bonds. 
Ihe United States never did see that a sufficient tax was levied to pay those bonds. 
Ao particular tax was ever le\i.ed to pay those bonds; but instead, after July 1, 1878, 
hall of the money that went toward the retirement of the bonds was paid out of the 
revenues of the District of Columbia and the other half out of the Treasurv of the 
United States. 

Under the language of the act under which this committee is sitting, 1 think that 
this committee has the authority to go back and ascertain if it be a fact, and then 
report il it so proves to be, that the United States was only a guarantor, and that it 
therefore never should have paid any part of them. But I doubt the wisdom of going 
into that, since everybody has acquiesced, and since Judge Downey, as comptroller j 
decided that the United States was obligated from year to year by the 50-50 act. 

Representative Hardy of Colorado. And they have been paid off 50-50? 

Representative Johnson of Kentucky. Yes. But the money that went into the 
sinking fund under the 50-50 plan, has been used not only, if I am correctly advised, 
for the retirement of the 3.65 bonds but for other purposes. 

The Chairman. That was under the $“1,200,000 to which I called your attention? 

Representative Johnson of Kentucky. Yes. 

The Chairman. And there was a ruling of the Comptroller General as to that? 

Representative Johnson of Kentucky. Yes. Now, there is another most serious 
thing connected with the retirement of the 3.(55 bonds. The act of Congress is as 
plain as the English language can make it, that no one of those bonds is ever to be 
retired at exceeding par; Init notwithstanding that emphatic provision of law, those 
bonds have been taken into that sinking fund at very liigh premiums. 

The Chairman. This committee. I might say, has taken cognizance of those features 
of the report. 

Representative Johnson of Kentucky. I think that every Treasurer of the United 
States who has done that thing ought to be sued on his bond, regardless of who he is. 

The Chairman. The findings disclose that the bonds were purchased and paid for 
at round figures, we will say, for the principal and accrued interest, Avithoiit any infor¬ 
mation being given on the record as to the accumulations of interest Avhicli were 
included in the purchase. 

Representative Johnson of Kentucky. When a man huys a hond he buys it at 
principal and accrued interest. 

The Chairman. That is true, but- 

Representative Johnson of Kentucky. My opinion has been that all along these 
bonds were purchased at principal and accrued interest and a premium, notwith¬ 
standing that the holders of those lionds bought them away down below 50 cents on 
the dollar. 

The (hiAiRMAN. The point I was attempting to make plain was that so far as the 
auditors have been able to ascertain there are no figures distinguishing the amount 
of premium paid, if any, from the amount of accrued interest. It is shown, as we will 
say, up to $107. 

Representative Johnson of Kentucky. That may be true, but that is more im¬ 
portant as a principle, or as a piece of wrongdoing, than it is as an amount of money 
between the District of Columbia and the United States. 

The Chairman. As I see it, the manner of procedure in that case would be to 
direct the attention of the Secretary of the Treasury to that situation, and, if necessary, 
call for a special investigation of that subject. 

Representative Evans. I would like to ask a question there, if I may? 

The Chairman. Yes. 

Representative Evans. Do you know of any fact in connection with the redemption 
of those 3.65 bonds by which the District would be really a party, or in any event 
chargeable with any part of that program? 

Representative Johnson of Kentucky. No; I do not believe that the District of 
Columbia as a corporation or a municipality, participated in a literal way in that 
transaction of acquiring those bonds at a premium; but I do believe, and can not help 
but believe, that the officers of the District of Columbia have countenanced and ap¬ 
proved it. 

Mr, Donovan, May 1 just say one word on that point, please? 

The Chairman. Certainly. 

Mr. Donovan. The act of Congress providing for the transfer of the sinking fund to 
the Treasurer of the United States, and his complete jurisdiction over the sinking 


9 09 

^ LJ ^ 


P^ISCAL RELATIONS BETWEEN U. S. AND DISTRUST OF COLUMBIA. 


fund, expressly exempted the accounts of the Treasurer of the United States from 
audit by the auditor of the District. The municipal authorities have no authority 
over the expenditures made from interest and the sinking fund appropriations. 

Representative Johnson of Kentucky. I have not said they did. 

The Chairman. No; but that is a proper statement to be made in that connection, 
I think. 

Representative Johnson of Kentucky. J made the equivalent of that statement, 
myself. 

The Chairman. Assuming that that was the situation, and the Federal Government 
afterwards took charge of the sinking-fund operations, they have exceeded their au¬ 
thority, as we will say to illustrate, by paying premiums for the retirement of bonds, 
against the express provisions of law. If that should prove correct, the way to recover 
may or may not be open on the part of the Federal Government, but in any event is 
the District not in position to set up a just claim against the Federal Government for 
its half of any such illegal payments, regardless of who made them? 
e Representative Johnson of Kentucky. I thoroughly agree with you. If the 
Treasurer, as an officer of the Federal Government, has exceeded his authority, and 
by his excess of authority the District of Columbia has been prejudiced, then the 
United States should make good to the District of Columbia, to the extent to which 
it has been prejudiced by the buying of those bonds at a premium. That should not 
settle it, however. The United States Government should undertake to collect from 
the official who did that thing in the face of a plain law. 

Mr. Taggart. The way that the interest was computed, and the payment of pre¬ 
mium and interest, as I understand it, the way that it has been presented in recent 
months, the accrued interest was only the interest on the coupon bonds from the date 
of the last coupon, so that it would be a very small amount. Any other coupons that 
were already due would be paid for as interest, and would be included in the price 
charged. 

Representative Johnson of Kentucky. I have been told that as much as 8 per cent 
premium has been paid for some of those bonds. 

Mr. Taggart. Some as high as 26 per cent. 

Representative Evans. As I understood from a statement made here the other day, 
Mr. Taggart, your records in the Treasury Department are gone, that will cover that 
question, are they not; or else you made so poor a record that unless you can determine 
it from the bond and the entry upon the bond,'it is impossible to tell whether it was 
paid or not? , 

Mr. Jaggart. I could not say as to the old records. I think we have a pretty good 
filing of sinking-fund accounts, though. I am not sure whether all of them are there 
or not. 

The Chairman. That is a matter that this committee has taken cognizance of, and 
it has it in mind. 

Now I want to ask Congressman Johnson concerning his membership on the District 
of Columbia Committee, extending over a period of 14 years. During that time, as I 
understand it, the Lincoln Memorial was erected. 

Representative Johnson of Kentucky. Yes. It was commenced, but not com¬ 
pleted . 

The ('hairman. Not completed during the 14 years; but it was authorized during 
your membership on that committee? 

Representative Johnson of Kentucky. It was authorized the latter part of that 
14-year term. 

The Chairman. Were any appropriations for the purpose made during your in¬ 
cumbency on that committee? 

Representative Johnson of Kentucky. Yes; but the appropriations were never 
made by that committee. The Committee on Public Buildings and Grounds, if I 
remeinber correctly, handled that. The District of Columbia Committee never had 
anything to do with it. 

The Chairman. So that that was not treated by the District of Columbia Committee 
as a District matter? 

Representative Johnson of Kentucky. The District of Columbia Committee 
could not, under the rules of the House, have anything to do with it. 

The Chairman. And a committee not dealing with District affairs was the commit¬ 
tee chargeable with the recommendations and the securing of a Federal appropria¬ 
tion for the purpose of erecting a memorial? 

Representative Johnson of Kentucky. That committee was chargeable with the 
consideration and preparation of the bill; but Congress itself voted the appropriation 
out of the Treasury of the United States, and it was done not only to pay a tribute 
to one of the greatest men of history, but also to upbuild and beautify the District of 
Columbia. 


FISCAL RELATIONS BETWEEN XT. S. AND DISTRICT OF COLUMBIA. 223 


that time were yon also a member of the District Committee 

on Appropriations? 

Representative Johnson of Kentucky. I have not been a member of the District 
Committee on Appropriations until this Congress. 

Tif^P^®®®?^tive Hardy of Colorado. Aside from the report of this committee, as a 
c;o ^ Congress, do you think the District of Columbia ought to be charged with 
50 or 60 per cent of the cost of the Lincoln Memorial? 

Representative Johnson of Kentucky. I think that the District of Columbia ought 
+D' ^ under the terms of the act under which you are proceeding, with everv 

tnmg that has gone toward upbuilding and beautifying the District of Columbia. 

Hardy of Colorado. Of course, that was not the question that I 


Representative Johnson of Kentucky. I do not mean to say that the District of 
^olum bia should pay the whole of the cost of construction of the Lincoln Memorial to 
which you are now referring, but that if the District of Columbia takes the position 
tnrough the local press and through her local lobby, as she is doing, that she ought to 
be relieved of some items which go to upbuild and beautify the District of Columbia 
and be charged with only a part of some others, if she is to be charged with some 
items mat ^ to upbuild and beautify the District of Columbia, then she ought to be 
charged with all. ^ In other words, she should not be complaining and howling all the 
rime that the United States Government is doing nothing toward upbuilding and 
beautifying the District of Columbia and at the same time antagonize the committee 
in reporting those facts. 

Senator Ball. Do you think it would be fair to the District of Columbia for Congress 
to authorize the erection of expensive monuments like the Trincoln Memorial and 
compel the District people to pay for those purely national monuments? 

Representative Johnson of Kentucky. You are asking now. Senator, for my 
private opinion as to matters that are beyond the scope of the law under which you 
are sitting. 

Senator Ball. Not beyond the scope of the law, if you are going to figure in that the 
District should have paid a part of that appropriation. 

Representative Johnson of Kentucky. I have not taken the position that the 
District should have paid any part of it. 

Senator Ball. I thought you had from the fact that you said “in beautifying the 
District.” 

Representative Johnson of Kentucky. I have taken the position that the District 
of Columbia should not claim to have money to her credit in the general cost of upbuild¬ 
ing and beautifying the District of Columbia without at the same time permitting 
the United States to be given credit for what she has done separately and independ¬ 
ently of the District of Columbia. 

Senator Ball. You realize that this credit, this surplus that is claimed to be to the 
credit of the District of Columbia, is due to the fact that Congress during the war and 
since the beginning of the war has not appropriated an equal amount to what has 
been levied on the District? While the commissioners probably in their recom¬ 
mendations made a total amount that would equal the total assessments. Congress 
has very materially reduced those appropriations. The appropriations for schools 
and streets, and so on, have suffered because Congress was at that time deeply inter¬ 
ested in other appropriations more vital at the time. 

Representative Johnson of Kentucky. I think you are mistaken in a large part of 
your premises and that an analysis of them will show that you are, and it is a wide 
field; but the main issue here before this committee is whether the District of Colum¬ 
bia is entitled to a surplus which it can pocket, and offset or use in future appropria¬ 
tions upon the theory that the United States has not done more than her part in 
upbuilding and jpeautifying the District of Columbia as she has gone along in that 
upbuilding and beautification. 

The Chairman. Well, Congressman, do we not want to arrive, in any consideration 
of what I understand to be your interpretation of this act, at the point where we are 
to recommend to the Congress that certain expenditures for the purposes and beauti¬ 
fication of the city have not been participated in by the District of Columbia? Now, 
if we are to do that, with its direct bearing on the surplus which is shown on the 
books and practically confirmed by both sides, should we not also report the amounts 
for which the commissioners requested appropriations for the purposes of governing 
the schools and paving streets, and other straight District activities which the Con¬ 
gress refused to appropriate for? Do you not think that the public needs for schools 
and for streets are of more importance and are paramount, as compared to the pur¬ 
poses of beautification, when even the District of Columbia Committee of the House 
had no opportunity or no authority in recommending appropriations for the purpose 
of building public monuments? 


224 FISCAL RELATIONS BETWEEN IT. S. AND DISTRICT OF COLT'WBIA. 


Representative Johnson of Kentucky. Senator, you have put several questions 
in one. 

The Chairman. Just purposely, perhaps. Our time is short. 

Representative Johnson of Kentucky. As to your first question, I would sav that 
neither the District of Columbia nor the United States nor anybody else should have 
credit for money that has never been spent. 

In the next instance, the next question that you suggest is one niore of policy than 
anything else. I can give an opinion only as to policy, and I believe you vdll bear 
me out in it, that nobody has been more liberal in this term of Congress toward 
granting the improvement of streets or the erection of schoolhouses than I have been. 

The Chairman. I will subscribe to that; you have been as to those items. 

Representative Johnson of Kentucky. Now, in addition to that, as to the question 
of erection of a schoolhouse, for instance, a schoolhoiise can be erected for a double 
purpose, and in the District of Columbia schoolhouses are erected for three or four 
purposes; but, legitimately, they can be erected for a double purpose, the first for 
strictly school purposes, the next for ornamental purposes. There has not been a 
schoolhouse built in the District of Columbia for many years that has not only answered 
the purpose of permitting the teaching of the children within its walls but that 
building, by the expenditure of millions of dollars upon it, has gone toward the 
beautification of the IJistrict of Columbia. 

In addition to that, in those schoolhouses you have erected—when T say ‘‘you” 
I do not mean you individually, because you were not here, but I mean those that 
were in Congress—in addition to that, provision has been made in all those school- 
houses for theatrical purposes, stages have been built, great rooms built to accommo¬ 
date not school children but public audiences. 

Senator Ball. I would like to ask one question there, Mr. Johnson. These public 
audiences that 3 mu have referred to, are they not generally the meetings of State 
societies whose members are not residents of Washington? Are not those rooms 
used more for that than anything else? 

Representative Johnson of I^entucky. That is quite the reverse of the fact. Senator. 
Some State societies have held their meetings in schoolhouses. The Kentiick}' 
State Society, for instance, held several meetings in a schoolhouse. I have forgotten 
the name of the associations. But the Kentucky" State Society now meets at the new 
Franklin Hotel. There has been no public adornment in the way of public buildings 
made in the District of Columbia—by adornment I mean beautification of the District 
of Columbia—in which the United States has not participated; but there have been 
many of these adornments or beautifications made in the District of Columbia for 
which the United States alone has borne the burden of payment. 

The Chairman. Gentlemen, it is getting late. I am beyond the time of another 
appointment, with people waiting for me. I suggest that we adjourn until 2.30 o’clock 
this afternoon. 

(Thereupon, at 1.10 o’clock p. m., the committee took a recess until 2.30 o’clock 
p. m.) 

afternoon session. 

The committee reconvened at 2.30 o’clock p. m.. Senator Lawrence C. Phipps 
(chairman) presiding. 

The Chairman. Congressman Johnson was the star witness this morning. I 
would like to ask him if he has anything further to submit to the committee at this 
point? 

Representative Johnson of Kentucky. Nothing, Senator, unless there is some¬ 
thing you wish to bring out from me. 

The Chairman. Mr. Colladay is not here yet. 

Mr. Tweedale. Mr. Colladay said that he would be here a little later. 

The Chairman. I suggest that we hear from Mr. Donovan next. 

Statement of Mr. Daniel J. Donovan, Auditor of the District of Columbia. 

The Chairman. Mr. Donovan, we had your statement in written form, and we 
have stated we were calling on ^mu for your comments, and you would be given 
an opportunity to state anything further which you desired to present to the com¬ 
mittee. Since that time you have been furnished with a copy of the comments 
of the Department of Justice and of the comptroller’s office. I think the committee 
would like to hear now anything further that you have to submit. 

Mr. Donovan. Mr. Chairman, my \dews are briefly, but I think rather fully, set 
forth in my reply submitted to you, commenting upon the \ arious features presented 


FISCAL RELATIONS BETWEEN IT. S. AND DISTRICT OF COLUMBIA. 225 


in the accountants report. I have read the report of Mr. Galloway as published 
in the Star, and also the report of Mr. Taggart and that of Mr. Tweedale and the 
Citizens committoe; and, to my mind, there is a substantial accord and agreement 
on the part of all parties concerned regarding the status of the various items em¬ 
braced in the accountants’ report. 

To start with, I do not believe that there is any question that with the exception of 
a few hundred dollars the District had in the Treasury on June 30,1922, a cash balance 
oyer and above the expenditures to that date, as disclosed by the accountants’ report, 
of nearly $7,500,000. The accountants in a part of their report, set up, I take it, for the 
purpose of providing the committee with information, a statement prepared by 
rne showing the net free surplus on June 30, 1922. That statement takes into con¬ 
sideration not alone a deduction for the District’s proportion of unexpended bal¬ 
ances of appropriation, but also an item of $825,603.69, representing certain trans¬ 
actions that are treated differently for bookkeeping or accounting purposes by the 
Treasury Department and on the ledgers of the Auditor’s office, on the one hand, 
and for tax rate purposes on the other. 

The actual free surplus of the District on June 30, 1922, as indicated in the account¬ 
ants’ report was $5,502,061.34. The item of $825,000 represents transactions taking 
place_ partly in the present fiscal year and partly in the fiscal year 1924, and as I 
take it, the committee endeavors to establish a certain balance as of June 30, 1922, 
this item should therefore not be considered. For that reason I suggest that the 
$825,000 be not considered in that connection. 

I do not believe under the first caption of the accountants’ report, Mr. Chairman, 
containing the general comments by the accountants, that there is any need for me 
at this time to say anything further than what I have already said in mv written 
report to you. 

The question of interest is one that was discussed quite fully this morning, and I 
do not think at this time there is any occasion for me to discuss it further. 

^ Regarding the item of the purchase of construction material which appears on 
page 35 of the accountants’ report, that, to my mind, is something which does 
not enter necessarily, directly or indirectly, into this investigation. I notice 
that the representative of the General Accounting Office, Mr. Taggart, is under the 
impression there is a profit in the account which should be divided between the 
United States and the District. As a matter of fact, that appropriation was only 
granted in the sum of $50,000, back in 1911, to be used for the purchase of construc¬ 
tion material. The appropriation is reimbursed from time to time as such materials 
are issued from stock to construction appropriations. Instead of there being a bal¬ 
ance of $51,400 on June 30, 1922, as indicated by Mr. Taggart, there were outstanding 
obligations, not matured for payment, of over $16,000; so that the actual balance in 
the appropriation was about $35,000. 

Representative Evans. May I interrupt there? 

Mr. Donovan. Yes, sir. 

Representative Evans. You started in with only $50,000. How could you have 
in that fund over $50,000 without there being unearned profit? In other words, 
was not your outstanding obligation against the $50,000 originally appropriated; and 
of necessity must you not have had a profit of at least the amount you had on your 
balances in excess of $50,000? 

Mr. Donovan. When we started with this appropriation in 1911 we had a certain 
quantity of stock on hand of various kinds of construction material, sand and brick 
and cement, paving blocks, and other materials used in construction work. 

Representative Evans. Which you carried into this account? 

Mr. Donovan. We continued to carry the stock. The stock existed at the time 
we got the $50,000 appropriation. 

Representative Evans. Is it lower now by $16,000 than it was then? 

Mr. Donovan. That stock carried is practically the same year in and year out. 
As we purchase new stock from the contractors it goes into the property yard and is 
issued to contractors and to the District for use in construction work. Then the proper 
appropriations for construction work are charged with the cost of the material and the 
account in question credited. This makes it a constantly revolving account. 

Representative Evans. Have you an inventory of the stock you had at the time 
the original appropriation of $50,000 was made? 

Mr. Donovan. There is an inventory taken by the purchasing officer who has cus¬ 
tody of the stock at the time the $50,000 appropriation was granted. The purchasing 
officer makes a book inventory at the close of each fiscal year, and the materials 
included in the inventory are given the prices of the follo^ving fiscal year. In this 
way one set of prices is maintained during each fiscal year. 


226 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The accountants criticized tliis practice, their idea being that we ought to carry 
the several purchases at the particular prices we paid the contractors for the material. 
But that would involve multitudinous bookkeeping and would necessitate the em¬ 
ployment of additional help. 

Tiepresentative Evans. How long has this revolving appropriation 1)0011 used? 

Mr. Donovan. Sipce 1911. 

Representative Evans. Is it not probable that in an account such as you describe, 
in a city growing as Washington has grown in the period that has elapsed since that 
account was created, your inventory now, taking it at proper prices, would be very 
much larger than it was in 1911? 

Mr. Donovan. I asked that question of the purchasing officer not later than last 
Friday or Saturday, and he told me so far as the inventory was concerned, it was 
substantially just what it was in quantity of material on hand as at the time this 
$50,000 appropriation was granted. 

Representative Evans. If he was absolutely accurate, then you would have the 
balance of 1,000 earned; but if I catch your thought, the point is this, that it would 
require an inventory of what you have and then an audit of the amount you owed, 
taking into consideration your balance on hand in order to determine whether there 
has been a profit or not; and that at the present time there is no balance, liut it is 
uncertain what the condition is? 

Mr. Donovan. It is uncertain so far as any information I have before me at the 
moment goes. 

Representative Evans, That is all. 

The Chairman, Let me see if I understand the situation. On July 1, ]911, there 
was a stock on hand belonging to the Federal Government and the District government 
jointly? 

Mr. Donovan. Purchased under appropriations; yes, sir. 

The Chairman. And $50,^000 was made free to increase that stock of materials to 
use as a working capital? 

Mr. Dovovan. Yes, to use as a working capital, and to overcome a condition that 
existed prior to the granting of the $50,000 appropriation, in this wise. Prior to July 1, 
1911, when this $50,000 was appropriated, we would make an estimate, based on the 
best information we could get, at the beginning of each fiscal year, as to how much 
material of the several kinds would be needed for construction work, dining the 
fiscal year. We would then charge on this estimated basis the several appropriations 
available for construction work. We might, for instance, charge an appropriation 
much more for material than the appropriation actually used during the year. 

To get away from this uncertainty, and so that appropriations might bear only the 
cost of the material actually used, we asked Congress for an appropriation of $50,000 
as a working capital, to pay the contractors. The appropriation is used to pay con¬ 
tractors for material furnished, and it is reimbursed as the material is issued out of 
stock. 

Representative Evans. And, in addition to what Congress gave you, you added to 
it the stock you had on hand? 

Mr. Donovan. With the knowledge of Congress, and the hearings on the $50,000 
appropriation will so show. 

Representative Evans. MTiat I was trying to get at was wdiat you actually had. 
It was your $50,000, and what you actually had on hand? 

Mr. Donovan. Yes. A stock of only $50,000 would not be anywhere near sufficient 
for our actual needs. We carry a stock of approximately $150,000 to $200,000 at all 
times. 

While, as shown by the accountants, the value of the stock as inventoried has in¬ 
creased practically 100 per cent, the quantity is substantially the same; the answer is 
that the price of the material has increased 100 per cent. 

The Chairman. Continuing my line of inquiry, you have acquired material with 
the $50,000 which was appropriated and in which the Government of the United 
States and the District also shared? 

Mr. Donovan. Yes. 

The Chairman. 50-50? 

Mr. Donovan. Yes. 

The Chairman. And as it was used out of the stock, you made charges against the 
contractors or against the appropriations? 

Mr. Donovan. That is true. 

The Chairman. During that time, throughout that operation, you may have found 
some accretion to the fund; but the stock on hand as it stands to-day belongs to the 
District and the Federal Government jointly, does it not? 

Mr. Donovan. That is true; yes. 

The Chairman. How much free money had you on hand at the 1st of last July? 


FISCAL FFXATIONS BETWEEN U. S. AND DISTBTCT OF COLUMBIA. 227 


Mr. Donovan. About $35,000 free money. 

The Chairman. And it could only be used for that purpose? 

Mr. Donovan. It could only be used for that purpose. If we had to close out the 
appropriation account itself at any time, and had to liouidate our stock, the money 
would go back to the District and the United States. No third party is involved. 

The Chairman. It was Mr. Taggart that raised that question, was it? 

Mr. Donovan. Yes, sir. 

Mr. Taggart. I merely brought out some details in connection with it. It is not 
considered good accounting in Government appropriations to mix two or three funds 
together, which has apparently been done in this case. For instance, they have 
continued the stock of materials on hand when this $50,000 was appropriated, and 
they have added $50,000 worth of stock from time to time, and it has been resold so 
that all of the material on hand and the cash on hand together apparently at July 1 
amounted to about $283,000. I think that perhaps Congress might authorize the 
District to keep that amount of material on hand if it is absolutely necessary; but 
under the appropriations, under the laws that were given to the District, it seemed 
to me that they had exceeded their authority in turning any property into the fund 
and selling property which was paid for out of other appropriations and turning the 
proceeds into this revolivng fund, which has apparently been done. 

The Chairman. If they had not had stocks of material on hand, or if they do than 
been granted that $50,000 for this specific purpose, then it would have been necessary 
to purchase in the open market from time to time these various articles and to charge 
the cost at that time to the account. Now, the $50,000 addition to what stock of 
material they had on hand enables them to supply materials that are needed for the 
various forms of work, without going into the market and making independent pur¬ 
chases, 

Mr. Taggart. I understand that they did not go into the market before. As 
Major Donovan has said, they used a certain allotment from each appropriation at the 
beginning of the year. 

Mr. Donovan. We went into the market and purchased the materials under com¬ 
petitive proposals. 

Mr. Taggart. You contracted for the materials, did you not? 

Mr. Donovan. As we do now. 

Mr. Taggart. It is simply for the convenience of the District in taking care of the 
purchase of materials. It is very valuable to them, I think, in the conduct of their 
business. 

On the other hand, I have no idea of the amount of material that should actually 
be sold, and the amount turned into the receipts unless Congress so desires. 

The Chairman. It seems to me that the Congress knew the purpose for which the 
$50,000 was desired when it authorized the appropriation, and that whatever is in 
the fund to-day, whether it be material or cash, belongs jointly to the United States 
and to the District. 

Mr. Taggart. Yes. 

The Chairman. The only question that arises in my mind is whether or not the 
amount so carried is excessive, and greater than is needed; and I realize in that con¬ 
nection that by reason of the increase of prices of material which have occurred during 
that time, there has been an accretion to the fund. 

Mr. Taggart. Oh, yes;'l think there is no doubt that there has been an accretion 
to that fund. But whether that accretion to the fund does enable the commissioners 
to buy more material, I do not know. I could not say as to that. 

Mr. Donovan. That is purely an administrative matter and one that has received 
the attention of the commissioners and the purchasing officer, and they claim they 
can not properly handle all the District construction work with less stock than we are 

now carrying. , . , -ruf rn 

The Chairman. It would be more than an equal amount in volume il Mr. laggart s 

statement is correct. 

Mr. Donovan. But the prices have doubled. 

The Chairman. Yes; but he refers to an amount of $283,000. 

Mr. Donovan. But, Mr. Chairman, that is merely the inventoried value of the stock 
on hand. It does not necessarily mean that we have paid anything like $283,000 for 
the stock. There is a great deal of stock that has been on hand for many years, such, 
for instance, as granite curbing, which we may carry for 20 years, but when we need it 

we have it on hand. . .,, , • i-..i, 4 . i + 

The Chairman. 1 think the committee will take cognizance ot that feature. 

Mr. Donovan. Yes; but it is not a matter, so far as I can see, that in any way 
reflects upon the question of surplus revenues in the Treasury. It is more a matter of 

information. 


228 FISCAL EELATIONS BETWEEN U. S. AND DISTKICT OF COLUMBIA. 


Representative Evans. Just what effect has the change in the ratio of contribution 
from 50-50 to 60-40—what effect is it likely to have on that account as it goes along in 
the future, if any? 

Mr. Donovan. The payments are now made on the basis of 60-40, and credits are 
now made 60-40. That was a matter we had up a short time ago. 

Mr. Taggart. They are all now on the basis of 50-50. The Comptroller General 
made a ruling that this fund was originally contributed on the 50-50 basis, and must be 
so carried on the books of the Treasury. Until the last few years the appropriation had 
been carried on the books of the Treasury 50-50. 

Representative Evans. What 1 had in mind was this. It has to do with the reim¬ 
bursable matter, and to save confusion, so that I should think the thing to do would 
be to make a readjustment of that account and make the contribution 60-40, so that 
there never would be any question about carrjdng it. That is what I had in mind in 
asking the question. 

Mr. Donovan. Yes. 

Representative Evans. That is all. 

The Chairman. MTiat is the next item you have? 

Mr. Donovan. The next item refers to the trash-reduction plant, and appears on 
page 35 of the accountants’ report. 1 think I have covered this matter in my written 
statement. 

The criticism, if it be intended as such, is that we failed to make a transfer of cer¬ 
tain moneys derived from the sale of miscellaneous refuse from the miscellaneous 
deposits fund account to the revenues of the United States and the District of Colum¬ 
bia by June 30. The transfer of those funds was made in August, 1922, to the extent 
of about $30,000. 

As I have indicated in my letter, the only effect of the transfer by June 30 would 
have been to increase the District’s general fund balance by 60 per cent of the amount 
transferred. 

Now, Mr. Taggart believes we should not deposit moneys derived from the sale of 
miscellaneous refuse in this account. All of the moneys, of course, are in the Treasury. 
But all the moneys received from proceeds of sales should, according to Mr. Taggart, 
be deposited in the Treasury to the credit of the United States and the District of 
Columbia in proper proportions, and the expenses incidental to the handling of the 
trash paid out of the appropriation for city refuse instead of from the proceeds as at 
present. That could be done, it is true, but we would have to include an item for the 
purpose in the estimate of appropriation for the disposal of city refuse. The only ex¬ 
pense that we now pay out of the moneys derived in this way is for hauling from the 
plant to the railway station. This amounts somewhere in the neighborhood of $800 
to $1,000 a month. 

The Chairman. Well, but that criticism of ]\Ir. Taggart’s is based upon the fact 
that that is the accepted method under which Government appropriations are gen¬ 
erally handled, and where we are finding exceptions to-day in the District appropria¬ 
tion "bill or other appropriation bills we are changing them and putting them on that 
basis. It is possible for you to estimate for the expenditures and for the purposes of 
the Budget the amount of expenditure that will be incurred in collecting and de¬ 
livering this trash, and it was in accordance with better practice it seems to me—and 
I think that is the general view—it would be better to appropriate for the necessities 
and to turn in the revenues. In the outcome it is the same, perhaps, but in one case 
those making the appropriation know what the activity is costing and what the 
receipts are, while in the other case they merely see the net results of the activity. 

Mr. Donovan. We can, Mr. Chairman, in the preparation of the 1925 estiniates 
take care of this particular item so as to pro\’ide for the expense of hauling out of the 
appropriation itself and turn the gross proceeds into the Treasury. Of course we 
could in a way accomplish the same result now by asking for bids, as we do from month 
to month for the sale of this material, and impose upon the bidder the expense of 
hauling from the plant. 

The Chairman. But the hauling to-day is done by your vehicles? 

Mr. Donovan. No, sir; not ours, but "by hired vehicles. We have not enough of 
our own vehicles engaged in city refuse work that we could use in this particular work. 

The Chairman. TOere do you make a transfer of this rubbish? Does it go into a 
central depot where you destroy what can not be sold? 

Mr. Donovan. Yes; it is delivered to the trash plant near the Eckington freight 
yards, and there the rags, cans, etc., are separated by the pickers. Then we ask for 
bids as the material accumulates, and accept the best bid. 

The Chairman. The only difficulty would be in getting bids for next year for 
delivery on the ground at the trash plant instead of delivery 1. o. b. cars? 

Mr. Donovan. Yes. 

The Chairman. Ik\Tiy not resort to that? 


FISCAL EELATIONS BETWEEN U. S. AX 


D DTSTRKjT OF COLUMBIA. 229 


of trash qufckt?.' 

other proposal, then, would meet that proposition—that von 
m deliveries made from the trash plant to the cars? 

'rl' could be done in that way; yes, sir. 

on the nexTappropriat “on bin'’® ' *' 

of this hauHng cost."^'^^ inserted in the next estimates to take care 

expense?^^^^^^^^ Hardy of Colorado. Does the trash make you a profit or is it an 

expense. When you take the cost of collecting? miscel¬ 
laneous refuse from all over the District and compare that amount with the proceeds 
nnrived^irom the sale of the waste matter, the answer is obvious. 

St ^ trash in itself, if it were segregated from the ashes and other 


'rl' ‘Separate collections are made of trash, garbage, and ashes. 

I he Chairman . And that is again separated from the garbage? 

Mr. Donovan. We have a separate collection for the garbage. 

The Chairman. How do you handle the garbage? 

Mr. Donovan. It is shipped down to Cherry Hill, Va., where the District has a 
reduction plant, and \ye sell the by-products, from which quite a good deal of money is 
nntamed. 1 think this year the recei})ts will be in the neighborhood of .$300,000 to 
$3o0,000 from the sale of by-products derived from the reduction of garbage. 

The Chairman. How much does it cost to collect the garbage? 

Mr. Donovan. For the garbage, ashes, and miscellaneous refuse this year 1 think 
it 18 costing us about $850,000. 

Che Chairman. That is the item on w'hich you are asking for a deficiency in the 
estimate? 


Mr. Donovan. We have $750,000 in the ap])ropriation act for 1923. We are asking 
a $92,000 deficiency. 

Representative Evans. Just in that connection, is all this, ashes and garbage, and 
trash, included in one appropriation? 

Mr. Donovan. Yes; one lump-sum appropriation. 

Representative Evans. If 1 may say. Senator, you may secure the correction you 
suggested a moment ago, in the deficiency bill. 

Representative Hardy of Colorado. Do all the big cities collect trash and garbage? 

Mr. Donovan. Practically all the big cities do, I believe. 

The Chairman. The District of Columbia has only been disposing of its garbage in 
that manner for the last few years, 

Mr. Donovan. For three or four years. 

The Chairman. It was in the first District bill that 1 sat on, 

Mr. Donovan. We obtained authority in 1918 to take over the work the following 
July. 

The Chairman. That is all I have to say on that item. What is your next item? 

Mr. Donovan. Disposition of certain receipts. I think it is conclusively estab¬ 
lished that the moneys have been properly distributed between the United States and 
the District of Columbia. My report goes into some detail on that point. 

The Chairman. We have quite a lot of detail on that. We have from the repre¬ 
sentative of the General Accounting Office and from the representative of the Depart¬ 
ment of Justice, as well as the Citizens’ Joint (Mmmittee, quite a good deal, and they 
appear to be all in accord on that item. 

Mr. Donovan. You will note, Mr. Chairman, that 1 transmitted with my report a 
copy of the report submitted by me to the commissioners in November last, which is 
now before the Comptroller General for decision regarding the application of certain 
legislative provisions in the 1923 appropriation act, with particular reference to the 
items the District has heretofore been receiving entire credit for. 

The Chairman. Yes. Do you desire to say anything further regarding oflicers’ pay 
and allowances? 

Mr. Donovan. No; 1 think the matter speaks for itself. Congress has never required 
the District of Columbia to pay any part of the salaries and allowances of such Army 
offidfers. The District is not responsible for the assignment of Army officers to the 
supervision of municipal matters. The organic act of June 11, 1878, retains under the 
jurisdiction of the United States all the public works to which these Army officers are 
assigned, and the Comptroller of the Treasury years ago decided that they were works 
over Avhich the municipal authorities had no control. 


230 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Senator Ball. The Army officers assigned to various States for engineering work 
under the river and harbor act are not paid from the appropriations for those improve¬ 
ments, are they? 

Mr. Donovan. No, sir; they are not. 

Senator Ball. They are paid out of distinct salary appropriations? 

Mr. Donovan. They are paid out of the regular Army appropriations; yes, sir. 

The Chairman. In cases where work is performed for municipalities, are those 
municipalities charged with any proportion or any part of the salaries of those officers? 

Mr, Donovan. To the best of my knowledge and belief—and I have looked into the 
matter but slightly—they are not. 

The Chairman. How about private works, improvements of rivers and harbors, 
where the Government gives a permit for the work to be performed but assigns Anny 
officers or others to look after the Government interests. Are those private activities 
charged with the officers’ salaries? 

Mr. Donovan. That I could not say, I do not know. 

The Chairman. I would like to ask Mr. Taggart about that. 

Mr. Taggart. It is my understanding that they are not. 

The Chairman. Have you looked into it? 

Mr. Taggart. I was for more than three years employed in the United States 
Engineers’ office of the Army, and at that time no part of the salaries of the engineers 
was charged against these appropriations. The salary of the engineer officers was paid 
out of quartermasters’ appropriations, while the improvements were paid for out of 
the private funds or funds appropriated for river and harbor improvements. 

The Chairman. 1 notice you made no recommendation regarding that item. Why 
did you not include a recommendation regarding that item? 

Mr. Taggart. 1 thought that was for the committee to decide and not for me. 1 
did not feel competent to make a recommendation. It seems that the District does 
get a certain benefit from having these officers assigned to the District, and yet it 
did not seem to me to be the policy of the United States in other districts to have the 
salaries of those men charged to private interests; so that I did not think it was com¬ 
petent for me to have those salaries charged against the District. 

Representative Hardy of (Colorado. What are they doing, generally? 

Mr. Donovan. We have an engineer commissioner in the District with three assist¬ 
ants from the hffigineer Corps of the Army. They are detailed from that corps by 
authority of law. 

Representative Hardy of Colorado. Does the Army engineer get only his salary? 

Mr. Donovan. His salary and allowances. 

Representative Hardy of Colorado. He gets no allowances? 

Mr. Donovan. He gets his salary and allowances, and where the two are under 
$5,000 a jmar, we have a permanent law which allows the District to make good the 
difference between such total and $5,000. The assigned Army officers are engineer 
commissioner and his three assistants, the officer in charge of the Washington Aque¬ 
duct, and an engineer Army officer in charge of the reclamation of the Anacostia 
Fiats, as well as those assigned to other projects authorized by Congress from time 
to time. Take, for instance, recently the Key Bridge. The law provided that it 
should be erected under the direction and control of the Secretary of War, and an 
Army engineer was detailed to supervise the construction. 

Representative Hardy of Colorado. I can see where the engineer of the Key Bridge 
might be considered another way; and the three assistants of the engineer commissioner 
might be considered another way. 

Mr. Donovan. The organic act provides for a board of commissioners composed of 
three persons, two appointed from civil life and the third an officer of the Engineer 
Corps of the Army, detailed by the President. There is nothing in the organic act 
or any other act that requires the District to pay any part of the engineer commis¬ 
sioner’s salary unless his salary is under $5,000, 

Senator Ball. Suppose that it was under $5,000, is there a specific law authorizing 
the District to pay, to make up that deficiency, out of District funds? 

Mr. Donovan, Yes, sir. 

Senator Ball. Would not that imply, then, that they should pay the difference 
up to that amount? 

Mr. Donovan. The law distinctly provides that where the engineer commissioner’s 
salary and allowances are under $5,000 the balance shall be paid by the District'd 
Columbia. 

Senator Ball. Would not that imply, therefore, that the District has to pay up to 
that amount? 

Mr. Donovan. Unquestionably. 

Senator Ball. By implication? 


FISCAL RELATTOXS BETWEEN U. S. AND DISTTIICT OF COLUMBIA. 231 


The Chairman. I would like to ask Mr. Galloway if that is his view of the law. 

Galloway . I think it was the intention of the law, Air. Chairman and gentlemen 
of the committee, that the engineer commissioner of the District should be assigned 
Honi the Regular Army staff and paid as all other Army ofhcers are paid. Attention 
has been called here to this special statute which provides that in the event his salary 
as an Army officer and allowances do not equal |5,000, the District shall pay or may 
I^y up to $5,000, making up the deficiency. That very clearly, to my mind, indicates 
that the regular salary of the officer through his Army status should be paid to him, 
as that of any other officer is paid, namely, by the United States Government. That 
was my opinion of that; yes, sir. 

The Chairman . Is that on the theory that being in the Army Establishment he is 
entitled to his salary and would be drawing it, whether he was assigned to this work 
or not? 

Air. Galloway. Absolutely. He is a part of the Regular Army of the United States. 

The Chairman. Would that same rule apply to his three assistants, that they have 
a fixed status in the Army and they would draw their salaries whether they were 
assigned to this work or not? 

Air. Galloway. Surely, they would draw their salaries, and they would be assigned 
to some other work if they were not assigned to this. 

Mr. Donovan. Air. Chairman, the organic act provides that the engineer commis¬ 
sioner shall be an officer detailed from time to time from the Corps of Engineers by 
the President for this duty; that he shall not be required to perform any other duty, 
nor shall he receive any other compensation than his regular pay and allowances as 
an officer of the Regular Army. 

Subsequently the law was amended to the extent that where the pay and allow¬ 
ances amounted to less than $5,000, the District of Columbia should pay the difference 
between such pay allowances and $5,000. 

Mr. Galloway. Air. Chairman, it is my impression that, regardless of the fact that 
the law was subsequently amended so as to permit the District to make up the defi¬ 
ciency between his regular pay and $5,000, the organic act clearly contemplates 
that he should be on the regular pay roll of the United States Army that is an Army 
officer detailed for special service; and I think, regardless of the other provisions, 
that would be, in my opinion, the clear intention of the statute. That was the view 
that I took of it. 

The Chairman. Are there any other questions on this subject? 

Representative Evans. I would like to ask a few questions, if I may. Air. Dono¬ 
van, is it not a fact that in cases where the salary and allowances of the engineer com¬ 
missioner do not equal $5,000, the excess has been contributed from the joint funds 
of the District of Columbia and the Federal Government, in the proportions, at the 
time it occurred, of 50-50, I think? 

Air. Donovan. That is true. 

Representative Evans. You have read carefully the provisions of the law under 
which this committee has been working? 

Mr. Donovan. Yes. 

Representative Evans. Do you not think that under that law it is the duty of the 
committee, regardless of how the charge shall be made, to report the amount so 
paid? 

Air. Donovan. I do not. Judge Evans. I do not for one moment think, and I 
want to be eminently fair in my statement, that the District of Columbia should pay 
any part of the salary of the engineer commissioner or of the salaries of his assistants. 

Representative Evans. Now, you see, you are not answering my question. 

Mr. Donovan. I will answer in this way: I do not think I should be called upon 
to say how the committee should report. 

Representative Evans. That is all right, then, if you will put it that way. That 
is all. 

The Chairman. Are there any other questions? 

Representative Wright. 1 do not understand how you charge up to the District 
the amount under that construction fund. 

The Chairman. We have the total amount that has been paid during that period 
of 11 years. It amounts to $282,000. That is during the period from 1911, on the 

construction work. , . i i 

Representative Wright. Now, I want to know about this. There has been a com¬ 
parison made between Washington and other cities of^ the country and it has been 
stated that Army officers have been used by other cities. Have other cities 
in the United States used as many Army officers in connection with the municipal 

government as the District of Columbia has? . , m i: * 

Mr. Donovan. That I could not say, as I am not acquainted with details of Army 

officers to other cities. 


232 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Wright. In other cities the detail is usually of a temporary char¬ 
acter. They go there for a few days or weeks? 

Senator Ball. No; they have definite, permanent stations. At Detroit and at Cin¬ 
cinnati and at certain other places throughout the countr}" there are permanent 
places where Army officers are stationed. 

The Chairman. You take the city of New York, and for the purpose of handling 
its commerce it certainly has a greater number of Army officers than the District of 
Columbia has, employed there at all times. 

Senator Ball. But that does not apply to river work and harbors. 

Representative Evans. And that is not the kind of work that the engineer com¬ 
missioner does in the District. It is not that kind of work at all. 

Senator Ball. Is there any other city in the United States you could compare 
with the District of Columbia upon a proposition of this kind? AYu have no legis¬ 
lative act authorizing the detailing of an engineer officer to take part in the govern¬ 
ment of any other city than the city of Washington. It is the only city that the 
Government pays for, 50-50, or (50-40, on such a proposition. It is the only city in 
the United States that has any standing, as it were, with the Government. 

Now, there is no provision at all in the law to assign any engineer officer to any 
other city, because the United States Government has no control—^in a definite 
way, I mean—over those other cities. But the Government of the United States 
has entire responsibility over the government of the District, in Washington. 

Representative Evans. That does not change at all the question that the work 
which is done by assigned or detailed officers of either the Army or the Navy to the 
District is a direct contribution to the conduct of the business of the municipality, 
while that is not true with regard to any of the other cities. 

What I had in mind in the question I asked of Colonel Donovan was that under 
the law under which this committee acts it should fetch to Congress every fact which 
shows the contribution of either to the general government of the city during the 
time covered by the resolution. 

Senator Ball. But the very act that authorizes the assigning of that engineering 
officer to the District of Columbia provides, as I understand, for his payment. That 
is, it provides that the District shall make up his salary to the sum of $5,000, if it is 
less than $5,000. That necessarily would imply that it would not pay the regular 
Army salary of that man and would not be responsible for it. 

Representative Evans. That does not change at all the fact of the request which 
the law makes to the committee. 

Senator Ball. I understand that the law makes the request to the committee to 
show what the District owes the Government of the United States or what the Gov¬ 
ernment of the United States owes the District. 

Representative Evans. Well, it is broader than that, if I read it correctly. 

Mr. Donovan. As I view it, Judge Evans, the contribution of the engineer com¬ 
missioner’s services and of those of his assistants is just as much a contribution, and 
as directly and intentionally made, as the contribution by the United States of its 
50 per cent of the expenses of the District. 

Congress unquestionably, and in language very clear, shows that it was not the 
intention under the organic act to charge any part of the salary of the engineer com¬ 
missioner to the District of Columbia. 

In reference to the other detailed Army officers, particularly the one in charge of 
public buildings and grounds and the one in charge of the Washington Aqueduct, 
section 2 of the organic act provides: 

“That nothing herein contained shall be considered as transferring from the United 
States authorities any of the public works within the District of Columbia now under 
control or supervision of said authorities.” 

Representative Evans. Of course. Colonel, you would not for a moment contend 
that because the United States has retained control of the conduit or aqueduct under 
the jurisdiction of the Federal Government or the War Department, therefore the 
District of Columbia should be entitled to a credit for what it contributes for the con¬ 
duit, would you? 

Mr. Donovan. I have not claimed so, but I am claiming this, that the District 
should not be charged with any part of the salaries of these officers, unless Congress 
has directly so provided. 

Representative Evans. The question I put to you, then, and which you refused to 
answer, was not with reference to charges; it was with reference to information that 
should be conveyed under the resolution, and it is an entirely different thing from a 
charge; and Congress will determine the charges ultimately. 

Mr. Donovan. But the question involves the amount of money. 

Senator Ball. The provision for the payment of the engineer commissioner was a 
part of the general act, was it not? 


FISCAL KELATIONS BETWEEN U. S. AND DISTBICT OF COLUMBIA. 233 


Representative Evans. I think so. 

Mr. Donovan. Yes. 

Senator Ball. You do not claim that we should report all the money that the 
Governnienl has paid to the District of Columbia on the 50-50 proposition, do you 
because it is all a part of one proposition? The Government has paid 50 per cent of 
the expenses of the government all along. 

The act further provides, as I understand it, that the engineer commissioner shall 
have a salary of $5,000, and that if his salary and allowances as an Army officer are 
less than $5,000, the deficiency is to be made up from the general funds, the joint funds, 
and from them he is to be paid. 

Representative Wright. The United States contributed 50-50 under the old plan, 
and in addition to that contributed the services of these officers? 

Mr. Donovan. And all under the same act, Mr. Wright. 

Mr. Galloway. Senator Ball a few moments ago suggested something that aided 
me in coming to my conclusion on this thing, and sort of furnished a reason for it, 
and that is that the Government was putting this money here in the 50 per cent pro¬ 
portion, and it was only reasonable to believe that they were going to have a repre¬ 
sentative here to look after the management and handling of these matters. That 
was the reason, I say, for the Government providing for the detail of some of their 
own officers to assist in the handling of this work. 

Senator Ball. I intended to add this. You said one other city in the United States 
had an engineer officer assigned there. You must remember that in no other city of 
the United States does the Government provide that half of the expense shall be 
maintained by the Government; so that you can not compare the two. 

The Chairman. If there is nothing further on this topic, we will pass on to the next. 

Mr. Donovan. Mr. Chairman, I have no further comment to make on the report, 
unless there are questions to be asked me. 

The Chairman. I would like to ask you concerning the payment of the bonus to 
employees. When that was started in a general bill other than the annual District of 
'Columbia appropriation bill, the money was paid entirely out of the Federal funds 
instead of being paid proportionately, whereas the basic salaries were paid pro rata. 
How did that occur? 

Mr. Donovan. It occurred because of the absence of necessary language in the 
appropriation for increase of compensation for employees in the District of Columbia to 
take care of the payment of such increase in compensation to certain employees of the 
United States. In other words, the appropriations for the so-called bonus during 
those years provided specifically for certain groups of District employees, and only 
to that extent could we pay the bonus to such employees. The employees^ of the 
Federal Government whose basic salaries are paid from District appropriations, 
received their increase of compensation from purely Federal appropriations for that 
purpose, because the District appropriation for the purpose was not available to pay 
them. 

It may have been an oversight on the part of Congress, and undoubtedly was. I am 
already on record as admitting before the subcommittee in charge of the District 
appropriation bill for 1923 that the United States has an equitable claim against the 
District of Columbia for the amount involved in this item. 

The Chairman. I had no doubt that that would be your attitude. I think there 
is no question but what, if the bonus had been carried in the annual appropriation 
bill for the District of Columbia, the District would have shared in the payment of 
the bonus. But because it was covered in the general bill, it was put through as the 
last thing in the session—at least, it has been for the last two or three years ^and 1 
think that the Congress that prepared the bill overlooked the,fact that the District 
should be charged with one-half. 

Mr. Donovan. I might say that in the 1923 appropriation for the bonus, there is a 
paragraph to the effect that the increase of compensation for these same employees 
shall be paid out of the Federal appropriations; but the District at the close of the year 
must reimburse the revenues of the United States to the extent of 60 per cent of the 
amount so paid. 

The Chairman. Yes. , , i • i • 

Mr. Donovan. We will accomplish the necessary adjustment by asking tne various 

departments concerned to bill us, and then will make a tranter of funds. It will 
mean nothing more or less than bookkeeping entries. . • i 

The Chairman. Another item I wanted to call your attention to is the two appropri¬ 
ations for the purchase of land in connection with the National Zoological l ark. 
Those are items of $80,000 and of $2,500, which were carried not on the annual District 
of Columbia appropriation bills, but were carried in District bills. 

32894—S. Doc. 301, 67-4-16 


234 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Mr. Donovan. The District has paid, in the past, one-half of the cost of all land 
acquired in for the National Zoological Park. It is a matter for the committee to 
decide now, whether the District shall pay one-half or 60 per cent, as the case might 
be, of these two appropriations in question. ^ ^ 

The Chairman. In case the Treasury Department had billed the District for half 
of each of these items after the payment had been made to the owners of the land, 
would there have been any protest on the part of the District? 

Mr. Donovan. There would have been as we were not authorized, under the law 
as it was passed, to charge any part of the appropriation against the District, even 
though we might have been convinced it was an oversight on the part of Conp^ess. 

Representative Evans. Do you know whether or not in a recent District bill there 
was carried an appropriation for the purchase of additional land for the Zoo, payable 
only out of the Federal revenues, or not? 

Mr. Donovan. For the Zoo? 

Mr. Evans. I think so. 

Mr. Donovan. No. If such an appropriation was made it was charged in part to 
the District. Otherwise it would have been developed in the investigation, and 
particularly by Mr. Hodgson, in the preparation of the figures the chairman now has 
before him. 

The Chairman. Now I would like to ask you about the collections made by the 
clerk of the Supreme Court of the District of Columbia amounting to over $175,000, 
on which you claim that the District has a clear equity in these collections. 

The salary of the clerk of the District court, I understand, is paid entirely by the 
Federal Government. 

Mr. Donovan. Yes; he is paid out of a Federal appropriation for clerks of the United 
States courts. 

The Chairman. The other expenditures in that court have been on the pro rata 
basis? 

Mr. Donovan. Yes, sir. All appropriations for other expenses, witness’ fees,, 
jurors’ fees, etc., and the cost of conducting grand jury investigations into alleged 
frauds growing out of the recent war. 

Representative Hardy of Colorado. We have grand juries in various parts of the 
United States. 

Mr. Donovan. This was a specially organized grand jury for the particular purpose, 
and an additional appropriation for a significant amount was obtained. 

The Chairman. Those cases were to cover alleged misdeeds on the part of people 
who are not residents in the District of Columbia. 

Mr. Donovan. Yes, sir. We have had several cases of this kind in years past. 
The persons are brought into the District of Columbia for trial. 

Representative Hardy of Colorado. They operate here? 

Mr. Donovan. No, those men did not. 

Mr. Galloway. I think you are right in your statement that they operated here, 
purely because the seat of government was here. 

Representative Hardy of Colorado. New York, Chicago, and Denver. 

^Ir. Donovan. The matters occurred in various places; they occurred in connection 
with the several activities of the Government during the war; and they are not matters 
in connection with which the District is properly chargeable with any expense. 

Representative Evans. Is not this a fact, that there is nothing irregular, but it is 
purely a question of jurisdiction; and those criminal cases are tried here just like they 
would be tried in any other court that would have jurisdiction? 

Mr. Galloway. I think that is right. 

Representative Evans. And that the seat of government being here is the reason 
that the city gets a contribution of one-half, instead of having to pay all? 

Mr. Galloway. Absolutely. 

The Chairman. In this case the District contributed one-half of the expenses but 
received none of the proceeds. 

Representative Evans. I told you the other day, Mr. Chairman, that I was inclined 
to think that the claim of Colonel Donovan was correct, and that the District ought to 
have this 50 per cent or 60 per cent, just as I think the compulsory fine ought to be 
divided some way with reference to the Federal Treasury, because in that case, 
where there is a great amount of money collected as fines, the Government pays its 
part, 50 per cent, and the District takes it all. 

Mr. Donovan. But the law gives us the right to it. 

Representative Evans. I see; and at the same time provides that you should care 
entirely for your own police department and fire department? 

Mr. Donovan. You mean the law provides so. 

Representative Evans. Yes. 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 235 

Mr. Donovan. Yes; Congress ha^ repealed that law each year bv appropriating' 

on* ^ A department and police department on the 50-50 basis, and at present on the 

bO-40 basis, ^ 

Representative Evans. If the Congress took the money properly from the Supreme 
Court, you are entitled to one-half there. I am unable to see the"^ logic by which the 
Government itself, under similar circumstances, in the other court should not ^^et 
also. The logic in both cases will go to the same conclusion. 

Mr, Donovan. As far as the police court is concerned, the District Code provides 
that moneys collected in the police court shall be covered into the Treasurv to the 
credit of the District of Columbia. 

The Chairman. What is the date of that act? 

Mr. Donovan. March 30, 1901 (31 Stats. 1199). 

Senator Ball. Was not that law amended two years ago? 

Mr. Donovan. The police court law? 

Senator Ball. Yes. 

Mr. Donovan. No, sir. 

Senator Ball. That was before the committee. It was when Senator Sherman was 
chairman of that committee that it was discussed. 

I will ask Judge Evans to give some consideration to this. One reason why no 
change was made in the law requiring the distribution of police-court fees, or rather 
providing for the creating of the police-court fees, was in the fact that up to 1919 we 
used all the receipts of that court, by authority of Congress, in the payment of the 
police and fire pensions 

In 19J9 Congress passed a police and fire pension law and made a portion of the 
funds available that are not from the revenues of the District of Columbia, thereby 
releasing the police-court fees from that purpose. This year we will contribute over 
$300,000 of the District revenues to the payment of police and fire pensions. Yet 
the United States admits the principle by paying 40 per cent of the pensions of school¬ 
teachers. 

I thought the whole law amendment was gone into very thoroughly at that time. 
Senator Calder was chairman of the subcommittee on it, and I was a member of the 
subcommittee, and I think it was reported back to the committee; but probably 
that was the end of it. 

Mr. Galloway. Mr. Chairman, I just want to bring out the matter of the special 
grand jury that has been spoken of here. My recollection is that in some of the cases 
which have been presented to that jury, and out of which indictments have grown 
and fines may be assessed, even equal to the amount out of which the United States 
has been defrauded, which may run into millions; and that, perhaps, has a bearing 
upon the equities, as to whether the District of Columbia is entitled to its 60-40 or 
50-50 proportion of fees collected in those cases. I just wanted to call that to your 
attention in case you should make any recommendation. 

Representative Evans. Just one question there, Mr. Galloway, Would the fact 
that the amount is large or small change at all the logic by which you would determine 
whether it is right or not? 

Mr. Galloway. Yes; I think it would determine the equities of it. That is my 
personal opinion. 

Representative Evans. I said the legal situation? 

Mr. Galloway. Oh, no; but the way the thing now stands- 

Representative Evans. Just now the District fees in the police court are much 
larger than the ones in the Supreme Court. Suppose that was reversed, would that 
change your opinion any as to what would be right? » 

Mr. Galloway. No; it would not change my opinion as to what would be right, 
except in this, that this special grand jury is one that operates here purely because of 
the governmental activities. 

Representative Evans. The whole city is here for that purpose, is it not? 

Mr. Galloway. No; I do not think the whole city is. 

Representative Evans. I thought the Capital was here for that purpose? 

Mr. Galloway. No; I do not think the whole city is; and I do not think it would 
be quite fair when the Government has been defrauded of these large sums of money, 
that the District should get one-half of these fines. 

Mr. Donovan. I would like to call attention to the fact that the District has paid 
$1 268,340 to officers and members of the Metropolitan police force detailed to the 
White House between 1874 and 1922, and that Congress recently, somewhat tardily, 

I might say, has recognized the injustice of this charge to the people of Washington, 
and has now appropriated for Federal force entirely from Federal revenues. 

The Chairman. That is right. 

Representative Evans. Just in connection with that, was not that to place a toice 
entirely under the President, and not under somebody else? 



236 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Hardy of Colorado. It was not a question of justice, as Mr. Evans 
says. If the President conies to Denver and spends the summer, we will provide a 
police force that will take care of anything. [Laughter.] 

Mr. Donovan. I am not speaking of the President, but of the principle involved 
in the detail of the policemen to the White House and the subsequent action of Con¬ 
gress in providing for the payment of the force entirely from Federal funds. There 
is an implication at least that the previous practice was wrong. 

The Chairman. The reason for making that change was not based on that at all. 
It was that it was more in keeping with the dignity of a Chief Executive, and inci¬ 
dentally it seemed to be the only way of reducing the expenditure, by cutting the 
force down, which has been accomplished. The force has been cut from 54 to 33, 
with the expectation of making a further reduction in the next year. 

I would like to ask Mr. Taggart if he makes a recommendation on the matter of 
these supreme court fees, to the effect that commencing June 30, 1922, the District 
should participate in those receipts, but makes no recommendation as to a division 
of the funds that have been collected by the clerk of the supreme court in prior 
years? 

Mr. Taggart. My principal reason for not making any was for the reason stated 
by Judge Evans, that the police-court fees have been turned in wholly to the District 
of Columbia, and I thought, as long as one had been turned in one way and the other 
the other way, neither one would have lost very much. Of course, I understood, as 
Mr. Donovan says, that the policemen’s and firemen’s relief fund was originally paid 
out of police-court fees; but of recent years that has been paid entirely out of rev¬ 
enues of the District of Columbia, and all of the police-court fees have been turned 
into the District of Columbia. 

(The following memorandum was submitted by Mr. Taggart:) 

General Accounting Office, 

Washington, January 16, 1923. 

All fees and emoluments earned and collected by the office of the clerk of the 
Supreme Court of the District of Columbia are deposited in the Treasurv without 
crediting any part thereof to the District of Columbia, under the authority of 27 Comp. 
Dec. 542, this office, by letter dated November 26, 1920, having requested a decision 
as regards these fees and emoluments. 

These fees include earnings in law, equity, criminal, lunacy, district court, habeas 
corpus, requisition, bankruptcy, and adoption cases; also earnings from miscellaneous 
sources; for certificates of an official character, certificates of notaries public, authen¬ 
tications, oath and seals, acknowledgments, copies of official papers of various kinds, 
certificates of admission to bar, oaths of admission to bar, recording ministers, doctors 
and mid wives’ licenses, issuing marriage licenses and copying of the same, certifying 
sureties, limited partnerships, filing mechanics’ liens, releasing mechanics’ liens, 
other miscellaneous earnings, and one-half of the earnings in naturalization cases; 
other earnings deposited as above are fees of the United States marshals in this court, 
fees earned by the United States attorney for the District of Columbia, and fines of 
various nature. 

F. W. N. 

The Chairman. It was your thought, then, that when the law of June 29, 1922, 
took etfect, which covers this current fiscal year, inasmuch as the District has been 
ordered to credit one-half of those receipts to the Federal Government and keep 
one-half for itself, some similar action should be taken in regard to the fees collected 
in the supremo court? 

Mr. Taggart. Yes. I had not considered the matter of the large sums that Mr. 
Galloway has mentioned. I have not thought about those things. 

Representative Evans. What construction do you give to this language in the act? 

“And after June 30, 1922, any revenue derived from any activity or source whatso¬ 
ever, including motor-vehicle licenses, not otherwise herein disposed of, which activity 
or source of revenue is appropriated for by both the United States and the District of 
Columbia, shall be divided between the two in the same proportion that each has con¬ 
tributed thereto.” 

Mr. Taggart. If there were no other salaries at all funds, I should think that under 
that law the earnings of the Supreme Court of the District might be taken. But, on 
the other hand, the clerk’s salary is paid wholly out of United States funds, and it 
may l)e interpreted that these are earnings of the clerk and not of the court; and I am 
unable to interpret—I have no authority to interpret—what that might mean. 

Mr. Donovan. The question as to the meaning of the legislative provision you 
have j ust read is before the Comptroller General for decision, and with all respect for the 
person who prepared the legislation, the Comptroller General would be entirely 


FISCAL EELATIOFTS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 237 


holding that 40 per cent of every dollar of revenue collected by the District 
should be credited to the United States, although Congress never meant any such 
thing th® legislation is susceptible of such a construction. All moneys received 
by the District are derived as the result of the functioning of some activity or other, 
and every activity in the District, with the exception of the playgrounds and the 

, Doard, is appropriated for by both the United States and the District 

of Columbia. 

Representative Evans. I would like to hear how in the light of the facts the comp¬ 
troller would make such a decision. 

Mr. Donovan. I say that if this decision is as finely drawn as some of those that 
have come out about the District of Columbia, I would not be a bit surprised at such a 
conclusion. 

Representative Wright. I have a notion you would surprise me if I would listen 
to you. Did the District consider as a part of the beautifying of the District, the* 
improvement of Potomac Park? 

Mr. Donovan. Potomac Park was the product, in part, of dredging Potomac River. 
The United States always bears the cost of dredging navigable waters. 

Representative Wright. What is that? 

Mr. Donovan. The United States always pays the cost of dredging navigable 
w’aters. 

Representative Wright. The question is, who paid for it. 

Mr. Donovan. The United States paid. 

Representative Wright. Do you know the approximate cost? 

Mr. Donovan. I have not the slightest idea. 

Representative Wright. By whom is it enjoyed now? 

Mr. Donovan. I beg your pardon. 

Representative Wright. \\To enjoys the result of the work that has been done; 

' there? 

Mr. Donovan. By those who visit Washington, by Members of Congress as well as 
the residents of Washington. Washington is much more than local. 

Representative Hardy of Colorado. How is it paid now? 

Mr. Donovan. Sixty per cent by the District. 

Representative Wright. How about the park in front of the White House? 

Mr. Donovan. We are paying 60 per cent. 

Representative Wright. What fund or investment created the park? 

Mr. Donovan. That was part of the land originally turned over to the United States, 
and retained by the United States. 

Representative Wright. How about the playgrounds and parks over the city? 

Mr. Donovan. We pay practically one-half of all the parks in the city; Rock Creek 
Park, the National Zoological Park, Potomac Park, etc. 

The Chairman. And Potomac Park as well, the upkeep? 

Mr. Donovan. For the development, upkeep, and improvement of the parks we 
have been pajdng for years. 

Representative Wright. The actual building of the Speedway, what department 
paid for it? 

Mr. Donovan The Speedway w'as developed out of appropriations payable in 
part by the District and in part by the United States. The District for years paid 
one-half of all the appropriations. We are now paying 60 per cent of the appro¬ 
priations. 

The Chairman. Including the dredging? 

Mr. Donovan, No; I am speaking of the Speedway. 

The Chairman. But the ground that the Speedway occupies was reclaimed land? 

Mr. Donovan. Reclaimed, yes; but I am speaking of the improvements. 

The Chairman. The improvements you paid for? 

Mr. Donovan. Yes. 

The Chairman. But the Government reclaimed the land? 

Mr. Donovan. The Government i*eclaimed the land. 

The Chairman. And the title to the land is in the Government? 

Mr. Donovan. In the United States. 

The Chairman. What about the Anacostia Park? 

Mr. Donovan. That is also property of the United States. We are paying 60 per¬ 
cent of the cost of the reclamation of Anacostia flats. 

The Chairman. In the earlier years you paid 50 per cent? 

Mr. Donovan. In the earlier years we paid 50 per cent, under appropriations made 
by Congress. Congress has fixed the charge to the District under each appropriation 

for this purpose. , , ^ i 

Representative Evans. Colonel Donovan, when they first started on that reclama¬ 
tion scheme known as the Anacostia Flats, I think, was it not entirely paid for, for a 
time by the Federal Government, or has it always been shared? 


238 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Mr. Donovan. I do not think so, Judge Evans. I am fairly certain it has always 
been paid for under appropriations partly shared in by the District of Columbia. 

Representative Evans. Do you happen to recall when that improvement began? 

Mr. Donovan. I do not know, but I believe the work started about six or seven 
years ago. However, it was within recent years. 

Representative Evans. Was it not first started for the purpose of furnishing a 
navigable depth of water up to some Government property over there? 

Mr. Donovan. Not the later reclamation. That may have been the case in regard 
to an earlier one that I am not at the moment acquainted with. 

Representative Evans. That is all. 

The Chairman. You said you had nothing further? 

Mr. Donovan. I would like the record to show the reimbursements made to the 
United States by the District between 1910 and 1920. Such reimbursements total 
$7,546,346.94. 

The Chairman. I might suggest, and save time, that you give us the captions, 
rather, and hurry through this, and turn over the copy to the stenographer, who can 
put it in, in full, in the record, unless the committee prefer to have all the language 
read. It is immaterial to me. 

Mr. Donovan. I do not want to comment on but one or two of these. 

The first item is $4,448,000, which represents the reimbursement to the United 
States for moneys loaned by the United States to the District betiveen 1902 and 1910. 
During that period Congress provided for certain permanent improvements costing 
some $18,000,000, to be paid for on a current cash basis. The District’s revenues 
were not sufficient to take care of this large outlay, and at the same time meet ordinary 
current expenses, and the Treasury was called upon to loan the District over $4,000,000, 
which sum, with 2 per cent interest, amounting to $586,000,000, was repaid the Treasury 
between 1910 and 1916. 

Representative Evans. Right there, do you show in your statement how much 
was principal and how much was interest? 

Mr. Donovan. I will insert in the record a statement showing how much was 
advanced each year, and the total repayment of the principal and the interest. 

(The statement referred to is here printed in the record, as follows:) 

Statement of advances by the United States to the District of Columbia, interest charges 

thereon, and reimbursements made account same, fiscal years 1901-1914, or so-called 

‘ ‘ extraordinary improvements . ” 


Fiscal year. 

Advances. 

Interest at 

2 per cent 
annual bal¬ 
ances. 

Payments 
to United 
States. 

Balances 
due United 
States. 

1901. 

$220,182.57 
1,539,055.77 

' 


$220,182.57 
1,759,238.34 
1,653,517.51 
1,349,661. 69 
2,240,030.14 
2,931,259. 49 
3,277,866. 28 
3,650,563. 06 
3,992,515. 03 
3,274,278. 98 
2,720,295.01 
1,981,949. 57 
621,521. 71 

1902. 



1903. 

$35,184.76 
33,070.35 
26,993. 23 
44,800.60 
58,625.19 
65, 557.32 
73,011.26 
79,850.30 
65,485.58 
53,301.63 
38,392.18 
12,430.43 

$140,905.59 
336,926.17 

1904. 


1905. 

863,375.22 
646,428.75 
286,796. 79 
307,139. 46 
268,940.71 

1906. 


1907. 


1908... 


1909. 


1910. 

798,086.35 
674,682. 75 
939,322. 28 
1, 208,708. 71 
633,952.14 

1911. 


1912. 


1913. 


1914. 


Total. 



4,131,919.27 

586,702.83 

4,718,622.10 





The next two items of $75,000 each are reimbursements for loans made to the District 
prior to 1878. 

The same statement applies to the next item of $50,000. 

The next item, of $586,000, is a reimbursement to the United States for one-half of 
appropriations made in 1877 and 1878 for the payment of interest on the 3.65 bonds 
of the District. 

The next item, $158,437.50, was a reimbursement on account of Washington Market 
Co. rentals from 1878 to 1914. Since 1914 down to the time the market was taken 
over by the United States Government, the District has been receiving part of the 
rentals of the market company, under a decision of the Comptroller of the Treasury. 




































riSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 239 


The next item, $37,996.70, is a reimbursement on account of Freedmen’s Hospital. 
1906 to 1913. This item and the next two, namely, $719,536.07 for reimbursement on 
account of support of the insane in St. Elizabeths Hospital from 1881 to 1911, and 
$282,754.26, also a reimbursement on account of the insane in St. Elizabeths Hospital, 
all arose as the result of insufficient appropriations annually granted by Congress, 
thereby preventing the District from discharging its obligations to the two institutions 
in full. On several occasions, as the records will show, recommendations were sub¬ 
mitted for deficiency appropriations for the purpose of discharging those obligations, 
but were not granted by Congress. 

At a later time, Mr. Chairman, I am going to ask you to grant me permission to talk, 
if necessary, on the question of interest on some of these items. 

The next item is $24,300.76, on account of fines in United States cases in the criminal 
division of the Supreme Court of the District of Columbia, between July 1, 1878, and 
June 30, 1908. 

The next item is $211,450.12, on account of fines in the United States branch of the 
police court between July 1, 1878, and January 1, 1902. 

The next three items, of $125,000, and $97,740.50, and $52,973.64, are reimburse¬ 
ments to the United States on account of certain loans in the form of appropriations 
made by the United States for District purposes prior to 1878. 

The last item is $317,825.98, the District’s part of the purchase price of Meridian 
Hill Park and Montrose Park, principal and interest at 3 per cent. 

Therefore, Mr. Chairman, between 1910 and 1920 the District actually reimbursed 
or paid the United States from its own revenues the total sum of $7,546,346.94. 

Of that amount $2,444,148.14 arose as the result of the investigation into fiscal rela¬ 
tions conducted by the House District Committee and reports submitted by Messrs. 
Mayes and Spalding. Anyone who will read the Mayes report on the general account 
of the District of Columbia ^vith the United States can hardly fail to reach the con¬ 
clusion that an it is exhaustive report on all fiscal transactions betw^een 1874 and June 

7, 1911. , , 

Representative Hardy of Colorado. Are there reimbursements you speak of as tiie 

result of that Mayes report? . . aaa 

Mr. Donovan. Reimbursements to the United States amounting in all to $2,444,000 
were brought about by the Mayes and Spalding reports. In other words, the investi¬ 
gations conducted by those accountants developed credits in favor of the United 
States amounting to that sum. I merely note the fact that the entire investigation 
from 1874 down to 1911 by Mayes and by Spalding failed to develop any credit 

whatever in favor of the District of Columbia. ^ n .l i c 

R/BprGScntativG Hardy of Colorado. That shows that you folks took caro of ovorjr 

thing pretty well here, being on the job. , i • t 

Mr Donovan. We did our very best in trying to see that the real meaning of the 
law was carried out in the disbursement of appropriations and in accounting for 

^^?msh also to include in the record for the committee a statement shomng the surplus 
revenues of the District of Columbia, beginning with the fiscal year 1916 and end n^ 

with the fiscal year 1922. 

Statement showing accumulation of surplus revenwisof tlw -Disject 0 / Columbia begmmng 
with the fiscal year 1916 and ending with the Jiscal year 192^. 


1916.. .. 

1917.. .. 

1918.. .. 

1919.. .. 

1920.. .. 

1921.. .. 

1922.. .. 


Net for year. 


$1,380,218.90 
673,733.77 
1,226,732.79 
783,236.72 
584,742. 75 
512,171.86 
342,113.04 


Accumulating. 


$2,053,952.67 
3,280,685.46 
4,063,922.18 
4,648,666.69 
5,160,838.55 
5,502,951.59 


to hear that portion of the report the otlil 

onlWeV^hich I’gave this morning as 

May 9, 1914. [Reading:] 
































240 FISCAL RELATIONS BETWEEN TJ. S. AND DISTRICT OF COLUMBIA. 


“Gentlemen: We beg to submit the following report of our investigation of the 
accounts of the District of Columbia and the United States, as they relate to the reve¬ 
nues of the District of Columbia and to the appropriations made from the revenues of 
the United States to the District of Columbia, and the advances made from both by 
the Secretary of the Treasury of the United States, as authorized by the various acts 
of Congress since the passage of the act of June 11,1878, to and including the fiscal year 
ended June 30, 1911, and also all appropriations and advances made by the United 
States to the District of Columbia from June 20, 1874, to June 30, 1878, inclusive, 
which affect the account between the United States and the District of Columbia, 
except those advances made by the Secretary of the Treasury for the payment of the 
interest on the 3.65 bonds of the District of Columbia prior to June 11, 1878. The 
report filed by us with you on February 15, 1913, fully considers those advances 
except as to the interest thereon. The amount due the United States on account of 
the support and medical treatment of the insane of the District of Columbia in the 
Government Hospital for the Insane is not considered in this account because the 
audit of said account at the Government Hospital for the Insane is not yet completed.” 

So that it seemed to myself, as I think it did to other members of the committee, 
that there had been a thorough and complete audit of all accounts conducted by the 
Mayes, in their audit; and I confess a little surprise at the statement made this morn¬ 
ing to the effect that those auditors put in their time merely on special items to which 
their attention had been drawn, and did not make a general audit. 

But even if that were the fact, the annual disbursements were undoubtedly checked 
against the items of the annual appropriation bills by the Comptroller General of the 
United States, and the statements of account made each year have been brought up 
to date, and the unexplained difference in amount is comparatively small. 

So it would seem to us—and I think I express the opinion of the committee in that 
regard—that this committee in the light of the audit that would be conducted by 
Haskins & Sells for the subsequent years, with instructions to consider all items that 
were affected by transactions of earlier years, would perhaps obtain a full and com¬ 
plete understanding of the situation as far as the accounts are concerned, as far as any 
items of accounting could be determined by auditors. 

Representative Johnson of Kentucky. Mr. Chairman, vdll you permit a remark 
from me right there? 

The Chairman. Yes. 

Representative Johnson of Kentucky. It is this, that if I understand you correctly 
you are undertaking to treat the Mayes report as final, when that is disputed by the 
fact that another accountant, Spalding, succeeded to Mayes, and went on with the 
work; and that when the political change in the House came about which stopped 
the prosecution of the work, Spalding stated there was more yet to be worked out if 
he had time. He told me the reports could have been found. 

The Chairman. I have read the language of the Mayes report. 

Representative Johnson of Kentucky. But the language is one thing and the 
outstanding fact is another. 

The Chairman. Of course this committee availed itself of the printed information 
as prepared by Spalding. Personally, I made inquiry of the Spalding office as to any 
unsettled items, or any matters of interest they might have that they could give this 
committee. That has brought forth no response. 

Representative Johnson of Kentucky. I might say, Mr. Chaimian, that Mr. Spald¬ 
ing’s wife is quite sick, as I understand, and has been so for some time. 

The Chairman. That may account for our inability to get any communication from 
him. We have been trying to get Mr. Spalding by telephone ever since the last 
hearing of this committee, when it was decided to have hearings. 

Representative Johnson of Kentucky. Yesterday I tried to tell Mr. Spalding 
about the approaching death of one of his kinsmen in Kentucky, and the person who 
answered the telephone said that his wife was quite ill. 

The Chairman. I am just informed by the secretary that he has talked this morning 
with Mr. Spalding over the telephone, and he will be here to-morrow, and we vdll 
then take up anything which he has to submit. 

Noav I will ask Mr. Galloway if he has anything further to contribute here. We 
have tried to cover the items we have had under consideration, as we have gone along, 
and we have given you an opportunity to express yourself, but you may have over¬ 
looked something. 

Mr. Galloway. Mr. Chairman, I do not think that I have anything further to say. 
I expressed my opinion in so far as I could in the written memorandum which I sub¬ 
mitted. 

In the last memorandum I undertook to cover what I thought was the legal side of it 
and not to argue the equitable or the moral side, because I thought that was the 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMLiA. 241 

rather than that of the Department of Justice. I have 
nornmg to add. If anyone has any questions that I can answer I will be glad to try to 

^ section of your report a reference to the fact that 

me opinion you expressed was given after consultation with other officials in the 
Department of Justice. Am I con-ect in that? 

Yes; that portion w'^as, Mr. Chairman. 

Chairman. Mr. Tweedale, have you anything that you wish to say? 

Mr. Tweedale. No, sir. o j 

Representative Johnson of Kentucky. May I ask the attorney of the Department 
01 Justice a question? ^ 

The Chairman. Yes. 

Representative Johnson of Kentucky. You have just stated that you ventured no 
opinion as to the moral worth of any questions that might arise, and that you confined 
yourseu merely to the legal questions. Did I correctly understand you? 

Mr. Galloway. That is right. 

^ Representative Johnson of Kentucky. From wffiat source did you get your instruc- 
proceed in this invevStigation—from the act of Congress or from another source? 
Mr. Galloway. I got my instructions—well, I am not sure as to the legal or technical 
way that I ivas appointed. My recollection is that the chairman of this committee 
referred to the Department of Justice the fact that the act made pro\ision for the ap¬ 
pointment of some one from the Attorney General’s regular staff, and the Attorney 
General in response to that made the appointment. 

Representative Johnson of Kentucky. To do what? 

Mr. Galloway. To do what the law says. 

Representative Johnson of Kentucky. What does the law say? Does it not say 
‘moral and legal obligations”? 

_ Mr. Galloway. No; I do not think that the wording with reference to the activi¬ 
ties of the Department of Justice says that; no. 

Representative Johnson of Kentucky. Were you not assigned here to represent 
the United States in looking after its interests in this matter? 

!Mr. Galloway. That is what I thought my duty; yes. 

Representative Johnson of Kentucky. And you felt it your duty to look into what 
you term the legal aspects of matters and to disregard any other viewpoint which the 
law itself may set up? 

Mr.^ Galloway. Not exactly; no. I feel it my duty to be here to represent the 
legal interests of the United States. 

Representative Johnson of Kentucky. If I may be permitted, I will read you from 
one part of the act that you are here to help carry out. [Reading:] 

“And in event any money may be, or at any time has been, by Congress or other¬ 
wise, found due, either legally or morally, from the one to the other on account of 
loans, advancements, or improvements made upon which interest has not been paid 
by either to the other, then such sums as have been or may be found due from one 
to the other shall be considered as bearing interest at the rate of 3 per centum per annum 
from the time when the principal should, either legally or morally, have been paid 
until actually paid.” 

So that you accept the direction as to the legality of questions and decline to accept 
the instruction as to moral obligation? 

Mr. Galloway. Well, I think it is my duty to pass on legal questions, but I do not 
think it is my duty to make suggestions on moral questions. 

Representative Johnson of Kentucky. Notwithstanding that the act directs that 
very thing to be done? 

Mr. Galloway. Just a minute. Let me find what the act says with reference to 
this. 

The Chairman. I might state that I think the committee will exercise its judgment 
as to whether or not it is to call upon the Department of Justice to advise it on moral 
subjects. 

Mr. Galloway. May I add, Mr. Chairman, the provision here with reference to 
what the Attorney General should do? It says: 

“The Attorney General of the United States hereby is authorized and directed to 
assign a competent attorney ”— 

Perhaps he has failed in that respect— 

“from his regular force of attorneys to represent the United States before said com¬ 
mittee.” 

I do not feel that it is the duty of the Department of Justice, the Attorney General, 
or any member of his staff, to argue moral questions. I feel that it is the duty of the 
committee to pass on and consider those things solely upon its own responsibility. 
If it is desired that I should, I will do so. 


242 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Johnson of Kentucky. When the law directs an investigation as 
to both legal and moral obligations, how do you read it that you are here only to appear 
on legal phases of things, and not on the moral phase of things? 

Mr. Galloway. I do not feel that the Department of Justice was either created, 
established, or maintained to argue or present moral questions. They are there to 
enforce and carry out the law, and they are to go by the law. 

Representative Johnson of Kentucky. Is not this act of Congress a law? 

Mr. Galloway. I feel that is is; yes, surely. 

Representative Johnson of Kentucky. Does not this act of Congress that you now 
say is a law direct the ascertainment of both the legal and moral obligations? 

Mr. Galloway. It directs the ascertainment by the comrnittee; yes, sir. 

Representative Johnson of Kentucky. And it also authorizes and directs the com¬ 
ing before this committee of an attorney to represent the United States in these 
matters? 

Mr. Galloway. Yes, sir; to represent the United States in legal matters. If the 
committee wishes me to argue these moral questions, I shall be very glad to do so. 

The Chairman. That is within the pro\dnce of the committee. If it desires that 
you be called upon for that duty, you will do so, I take it. 

Mr. Galloway. I shall be very glad to do so; although I will say that the committee 
has never indicated that it does wish me to do so. I want that to appear. 

Representative Johnson of Kentucky. You mean, then, you have declined to do 
so upon your own responsibility? 

Mr. Galloway. I have not declined to do so, but I have failed to do so because I 
felt it was not my duty. 

Representative Johnson of Kentucky. You have felt it your duty to accept the 
word “legally” but not to accept the word “morally” notwithstanding the fact 
that they are coupled together in the act? 

The Chairman. I believe this committee is competent to determine the full duties 
that it should call upon the representative of the Department of Justice for. Of 
com-se, if the gentlemen wish to continue this argument, I have no objection. 

Representative Johnson of Kentucky. I do not desire to continue it, Mr. Chairman. 

I think the duty is imposed upon the representative of the Department of Justice here, 
and that he has the duty to perform over and above a request that might be made 
by the committee. 

The Chairman. Is there anything fm’ther than that? If not, I was just about to 
ask Mr. Tweedale if he has anything that he desires to submit. He has been waiting 
very patiently here to-day. 

Mr. Tweedale. Mr. Chairman, I would prefer that Mr. Colladay should be here to 
open up the statement we wanted to make. 

The Chairman. Do you desire that Mr. Colladay make a statement? 

Mr. Tweedale. I understood that he wanted to; yes, sir. 

The Chairman. Then we will adjourn until to-morrow morning, at which time we 
expect Mr. Colladay to be present, Mr. Tweedale. 

Mr. Tweedale. Yes, sir; I will notify him. 

The Chairman. And we will also have Mr. Spalding here. Are there any others 
that any of the committee know of who desire to be heard and should be heard? 

Representative Evans. I was intending to see Mr. Cramton, who was the other 
conferee at the time this provision was put into the bill, but I did not have the oppor¬ 
tunity of seeing him to-day. If I do see him and he has anything to say, if you will 
permit, I will tell him to come. 

The Chairman. It is not a question of permission on my part. He has a perfect 
right to come. Any Member of Congress can be heard here. 

Representative Evans. Mr. Chairman, a Member of Congress who has not got a 
specified fact in his own knowledge might not feel like coming if he was not asked. 
But, waiving, that, if you say so and he has got something, I shall ask him to come if 
that is satisfactory. 

The Chairman. Certainly. I tried to make this plain at a former meeting, that 
each and every member of the committee had a perfect right to invite anyone that he 
thought could throw light on this question to come as soon as we had an open hear¬ 
ing. This is not exactly an open hearing, but we have endeavored to cover all those 
who were interested, so far as we were informed. 

Representative Evans. I did not so understand it, but I did understand, or thought 
I understood, that the secretary of the committee would call them up. 

The Chairman. He did reach about everyone. 

Thereupon, at 5 o’clock p. m., the committee adjourned until to-morrow, Tuesday, 
January 30, 1923, at 10 o’clock a. m. 


FISCAL RELATIONS BETWEEN THE UNITED STATES AND THE 

DISTRICT OF COLUMBIA. 


Tuesday, January 30, 1923. 

The joint select committee met, pursuant to adjournment, at 10 o’clock a. m., in 
the room of the committee on the District of Columbia in the Capitol, Senator Lawrence 
C. Phipps presiding. 

Present: Senators Phipps (chairman). Ball, and Harris, and Representatives 
Evans, Hardy of Colorado, and Wright. 

There appeared before the committee Mr. Herman J. Galloway, representing the 
Department of Justice, Mr. Daniel J. Donovan, Auditor of the District of Columbia, 
Mr. Earl Taggart, representing the General Accounting Office, Mr. Edward F. Colladay, 
representing the citizens’ associations of the District of Columbia, Mr. Alonzo Tweedale, 
a former auditor of the District of Columbia, Mr, W. W. Spalding, Mr. Hodgson, 
Representative Ben Johnson of Kentucky, and Representative Louis C. Cramton. 

The Chairman. The committee will please come to order. There is a quorum 
present. Mr. Spalding is present this morning, gentlemen, and if there is no objec¬ 
tion we will hear him first, as he has some other engagements and desires to get 
through as early as is convenient. 

Statement op Mr. W. W. Spalding. 


The Chairman. Mr. Spalding, we understand that you conducted some audit or 
investigation into the fiscal relations between the District of Columbia and the Federal 
Government a few years ago. 

Mr. Spalding. Into the account between the Federal Government and the District 
of Columbia, yes, sir. 

The Chairman. What was the nature of your authorization and instructions? 

Mr. Spalding. I was employed by the House District Committee, under resolu¬ 
tion of the House of Representatives for a part of the time, and I think under a clause 
in one of the appropriation acts for a part of the time. 

The Chairman. And what was the scope of the work that you undertook? 

Mr. Spalding. I went largely into the miscellaneous revenue accounts of the 
District of Columbia; the account between the United States and the District of 
Columbia on the revenue side, checking that up. 

The Chairman. Your employment was subsequent to that of the Mayes, father 

and son, was it? 

Mr. Spalding. Yes, sir. 

The Chairman. Mdiat period of time were you employed? 

Mr. Spalding. At various times, but not constantly, between 1913 and 1918, I 


think it was. 

The Chairman. Intermittently over a period of about five years.'’ 

Mr. Spalding. Yes, sir. . , . , ^ i-i 

The Chairman. What years of the accounts, what period of the accounts, did you 

cover in your examination? j 

Mr. Spalding. So far as I could, I investigated the accounts between 1874 and 

the date of the investigation, down to the then present time, ^ 

The Chairman. Did you make certain recommendations after having gone on with 

the work? 

Mr. Spalding. Yes, sir. , , , , xu 4. j u 

The Chairman. To what extent were they adopted, and were they acted upon by 

^^Mr^SpTLDiNG. In each instance they were favorably acted upon by the Congress. 

The Chairman. The period of time that you covered in your examination of ac¬ 
counts was practically the same as that covered by the Mayes examination, was it not? 
Mr. Spalding. From the standpoint of time, I presume it was, but the work was 

Vhe^hiAiRMAN. You did not undertake to compare the accounts chargeable under 

various items of the annual appropriation bill, did you? y,.! . x-x xv.o+ 

Mr. Spalding. Under tlie appropriations; no, sir. No; I did not get into that. 


243 



244 FISCAL KELATIONS BETWEEN TJ. S. AND DISTRICT OF COLUMBIA. 


The Chairman. Have you any statement that you care to make to the committee 
that would furnish us with information bearing on any transactions between the 
District and the Federal Government which you think should be taken notice of by 
this committee? 

Mr. Spalding. I have no statement to make, Mr. Chairman. I was called up here 
and I would be very glad to give you any information in my possession. I have not 
followed this investigation, and I simply want to let you have any information that 
I have if you will ask for it. 

The Chairman. You were kind enough to furnish us with some copies of the report 
that you made, at oiu request. Those we have had the benefit of. 

At the time that you stopped working on this investigation and made yom’ report, 
as you told us, the recommendations were acted upon favorably by the Confess, or 
adopted by the Congress, did j^ou feel then that you had completed the duties that 
had been assigned to you? 

Mr. Spalding. Well, I reported to the chairman of the House District Committee 
that there were some other items that I thought should be investigated. 

Senator Ball. That report was published, was it? 

Mr. Spalding. No; that was merely a verbal report that I made to him. 

Senator Ball, I understood you to say that it was adopted by Congress. If it was 
adopted by Congress, it ought to be a matter of record. 

Mr. Spalding. The chairman was asking me about another matter. In answer to 
his question I stated that I had submitted certain reports on items entering into ac¬ 
counts between the United States and the District of Columbia. Those reports were 
printed as public documents, and I presume are available to the committee; but the 
chairman also asked me about whether I thought the work was finished when I got 
through. I verbally informed the chairman of the House District Committee that 
there were certain other items that I thought ought to be investigated, but I did not 
have the time to do it. 

The Chairman. Have you in mind, or could you furnish us with a memorandum of, 
those items that you felt should be inquired into? 

Mr. Spalding. I have not them in mind. You must remember. Senator, that I 
have not had this matter up for four or five years, and just what they were I do not 
recall now. I remember, however, that two of them related to the miscellaneous 
revenues of the District of Columbia. I recollect that there were one or two items 
that had been treated as miscellaneous revenues of the District of Columbia which I 
thought should have been repayments to appropriations. 

Representative Hardy of Colorado. Did they amount to very much money? 

Mr. Spalding. It would bo a mere guess now. 

Representative Hardy of Colorado. A few thousand dollars or a few hundred thou¬ 
sand dollars? 

Mr. Spalding. Possibly $50,000 or $75,000. Possibly that. That is just a rough 
guess. 

The Chairman. Up to what year did you review these transactions that were not 
covered in the annual appropriation bills? 

Mr. Spalding. Will you kindly ask that question again? 

The Chairman. What I want is this. I have it clear in my mind that you did not 
check annual appropriations as against the charges and credits made on the books of 
the District, or the Federal Government, but you were inquiring into the miscella¬ 
neous matters, the distribution or accounting for collections or things of that character; 
and I am trying to arrive at the period of time. You say that you covered from 1874 
on up. Now, how far along did you come, up to 1911, or up to 1918? 

Mr. Spalding. Will you pardon me, Senator, when I say that my statement was 
that I did not check expenditures from appropriations. I did check the miscella¬ 
neous and the general revenue account of the District of Columbia from 1874 up to 
the then current date, which was 1913 to 1918. 

The Chairman. Yes. 

Mr. Spalding. From 1874 on. 

The Chairman. You practically, then, brought that examination up to the date of 
1918? 

Mr. Spalding. Yes. 

The Chairman, Can you furnish this committee a memorandum of the items 
which came to your attention, which you thought were susceptible of further examina¬ 
tion? 

Mr. Spalding. I will try to do that, Senator. That will require looking through a 
great many papers which I have not had out for four or five years, but I will tiy to do it. 

The Chairman. How quickly could that be done? 


F3SCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 245 


_ Mr. Spalding. Well, just as soon as I can get into it, with mv other work, I will do 
it; just as soon as I possibly can. 

The Chairman. Will that mean within the next three or four days or the next 
three or four weeks? 

Mr. Spalding. No, it means within the next three or four days. 

The Chairman. The committee is required to make a report not later than next 
Monday, and my impression was, from the conversation that I had with your repre¬ 
sentative, that you did not have anything further to communicate. You sent us a 
copy of the reports which you had, as I remarked before; but I did not feel from my 
conversation with your representative that you had any further information available. 

Mr. Spalding. May I ask who was my representative, Senator? 

The Chairman. The young man, I do not recall his name, who came up to this 
committee room and handed me the papers. However, that is immatrial. Does any 
member of the committee desire to ask Mr. Spalding any questions? 

Representative Evans. Mr. Spalding, you fixed as the conjectural amount, in 
answer to the question of Congressman Hardy, something like $50,000 or $60,000. Did 
that refer to the particular item which you then had in mind, or to all of the items 
which you mentioned to the chairman of the District Committee at the time you were 
closing your work? 

Mr. Spalding. I will not fix any definite amount. That is a matter that would re¬ 
quire a great deal of work and accounting. I do not know what the amount is. It 
might be $50,000 or $60,000. It might be more and it might be less. 

Representative Evans. At present you are not able to fix the nature of the items, 
other than you have already done? 

Mr. Spalding. No; but at the request of the chairman I am going to see what I 
can find on the question. 

Representative Evans. And you will then send a communication to the committee, 
or will bring it? 

Mr. Spalding. Yes, sir. I am assuming that that would be proper. I was employed 
by the House District Committee, and, strictly speaking, I take it that my report 
should be made to the House District Committee. But if this committee says that it 
is proper to present that matter here, of course I will do it. 

Representative Evans. Who was the chairman of the committee to which you 
refer—the House District Committee? 

Mr. Spalding. Mr. Johnson of Kentucky. 

Representative Evans. He is the gentleman who is here present? 

Mr. Spalding. Yes, he is here. 

The Chairman. Mr. Spalding, I may say, I think, that the committee is clothed 
vdth full power and authority to require you to furnish any information which you 
have available. 

Mr. Spalding. I was only considering the propriety of it. Senator; having been em¬ 
ployed by the House District Committee I was questioning whether I should report 
to them first, and then here later. But I will be glad to be guided by whatever you 
think about it. _ 

The Chairman. Time is an element, and I was going to ask Congressman Johnson 
what his thought is. 

Representative Johnson of Kentucky. I was going to say, if I may be permitted, 
to Mr. Spalding, that it is highly proper that he give to you all the information he can. 

Mr. Spalding. Surely. 

The Chairman. Are there any further questions to be asked of Mr. Spalding? 
It seems not. We thank you very much, Mr. Spalding, for your attendance, and we 
will be glad to hear from you further. 

Yesterday we were about to call on Mr. Colladay when it developed that he was 
necessarily engaged in some legal matters, and he was absent yesterday afternoon, 
although he was present all of the morning. If it is agreeable to the members of the 
committee we will give Mr. Colladay an opportunity now to make any statement he 
thinks proper. 

Statement of Mr. Edward F. Colladay. 

Mr. Colladay. If the committee please, I was absent yesterday afternoon, as the 
chairman has stated, attending a Government hearing in the Internal Revenue 
Bureau which I had been notified could not under any circumstances be postponed. 
I asked that Mr. Tweedale represent me in my absence, and I thank the committee 
for their courtesy in holding the matter open so that I might say a few words this morn- 

The citizens’ joint committee is comprised of representatives of practically all of the 
civic organizations in Washington, as stated in their brief. It was first formed in 1915 


246 FISCAL KELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA, 


to deal with the hearings then provided for Congress, and has been continued from that 
time since, and at the present time I am chairman of that committee. 

A brief has been prepared by a subcommittee of the citizens’ joint committee, copies 
of which have been delivered to the committee. If additional copies of that brief should 
be desired, as for instance, I noticed yesterday Congressman Johnson’s statement 
that he had not read the various records and reports, I would be glad to furnish them. 
They have not been printed in the usual press form, but rather in news print form, 
and I would be very glad to hand Congressman Johnson a copy in the form in which it 
exists. 

Representative Johnson of Kentucky. I am obliged to you for it, although I may 
never read it. 

Representative Evans. Is that included in this newspaper that we had yesterday? 

Mr. CoLLADAY. Yes, sir; but in the form in which I handed it to Congressman 
Johnson, it is perhaps a little more convenient. It is cut from the flat newspaper 
form that you have before you. Congressman Evans. 

Embodied in that brief is a report prepared by Mr. Alonzo Tweedale, who for many, 
many years was auditor for the District of Columbia and who, with the possible excep¬ 
tion of Major Donovan, is, I think, the best posted with reference to the record of 
financial matters in the District of Columbia; in which report Mr. Tweedale has 
re\’iewed, item by item, the report of the auditors, Haskins & Sells, employed by 
your committee; and that brief, including Mr. Tweedale’s report, comprises we think 
all that could properly be said in behalf of the taxpayers of the District of Columbia in 
the way of specific statements, comments, or criticism upon the Haskins & Sells report. 

There are a few general statements which 1 would like to present to the committee 
this morning, in addition to that brief. The question of interest has been set forth in 
certain form in the act of June 29, 1922, under which your committee is proceeding, 
and certain comments were made thereon by Congressman Johnson yesterday, and I 
would like to present just a few words by way of quotation from A^olume 15 of Ruling 
Case Law, which I believe is the best compendium of American law extant. I read 
from page 13, on the subject of interest as incident to or separable from the principal 
debt. [Reading:] 

“The right to recover interest after the payment of the principal sum due, depends 
upon whether the interest is due by the terms of the contract, or whether it is merely 
implied and allowed by way of damages in an action for the principal. 

“ If interest is due by the terms of the contract, the payment of the principal is 
no bar to its subsequent recovery; but if it is not due by the terms of the contract, 
the payment of the principal sum is a bar to recovery. 

“ The reason for the rule is that interest being a mere incident to the debt, can not 
exist without it, and the debt being extinguimed, the interest must necessarily be 
extinguished also.” 

The relation between the District of Columbia and the Federal Government is such 
that the District of Columbia can only act as Congress acts for it, in the matter of 
payments or demands. Congress has acted in the matter of requiring the District of 
Columbia to pay back certain items. In one instance Congress required 2 per cent 
interest on an item, and the interest was paid, with the item. 

In other instances Congress required the payment of principal without requiring 
the payment of interest. There was no contract obligation nor statute obligation to 
take the place of the contract obligation, prescribing interest. There was no interest 
separate and distinct from the principal obligation. And our position is that it would 
be appropriate for this committee to recommend to Congress that in those instances 
where Congress has acted, the matter be treated as final. 

The report of Haskins & Sells shows a balance found by them upon the books both 
of the United States Treasury and of the District of Columbia, in the general fund, of 
$7,574,416.90. 

The act of 1878 w^as, we think, intended to be a closing of the fiscal relations between 
the Federal Government and the District of Columbia on the basis there stated. 

We think further, and it has been exemplified here this morning by Mr. Spalding’s 
testimony, that Congress has pro\dded for a careful scrutiny of the records of the fiscal 
relations, with emphasis on the rights of the United States, and that scrutiny has been 
rnade by the Messrs. Mayes and by Mr, Spalding, and the items reported by them offi¬ 
cially have been acted upon by Congress and paid. 

While we believe that a restatement of the account such as a literal following of the 
act under which this committee is proceeding might be said to call for, would raise up 
millions creditable to the District of Columbia’s side of the account, both principal 
and interest, if interest is to be treated as due in the absence of a statute or contract 
providing for it—while we believe that, and that the amount found on the District 
side of the account would be very much larger than any additional amount that could 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 247 


b© found on the Government’s side, the Government’s side having been already very 
carefully cared for by Messrs. Mayes and Mr. Spalding- 

The Chairman. I want to be clear in my own mind. You say “while we believe 
that.” 

Mr. CoLLADAY. Yes. 

The Chairman. You are referring to your statement that if that were done, large 
amounts would be found due the District? 

Mr. CoLLADAY. Yes, sir. Now, while we believe that, we will be quite content— 
and when I say this I am speaking in behalf of the taxpayers of the District of Colum¬ 
bia in so far as they are organized in civic and trade organizations, and officially 
authorized—we would be quite content if this committee should strike a balance, 
based by way of settlement, closing all controversies past, and certainly to the present 
time. We say that to all practical intents and purposes every dollar that the Gov¬ 
ernment should have repaid to it by the District has been found in th’ese various 
audits and accounting efforts, and that this committee recommend to Concrress that 
this balance found on the books of the Treasury and on the books of the District of 
Columbia be treated and taken as the balance in the general fund we would be 
satisfied. 

Nobody paid that money but the taxpayers, and the license payers, and the privilege 
payers, and fine payers, etc., of the District of Columbia. There can be no question 
about that. It was there paid. And we submit that it should be taken as a balance. 
The result of that would be the finding of approximately $5,000,000 surplus at the 
present time to the credit of the District of Columbia. 

We think that the principle that was touched upon here yesterday is the true 
principle as explaining the existence of that $5,000,000 surplus. 

The Chairman. Now, pardon me; you say as stated yesterday? 

Mr. CoLLADAY. I am just coming to that. 

The Chairman. We want to know how it is. 

Mr. CoLLADAY. It was indicated by some speaker or some member of the com¬ 
mittee yesterday that this amount of $5,000,000 found on the books in the Treasury, 
unexpended, arose because Congress did not appropriate sufficient money, both from 
the revenues of the District and from the general funds of the United States, to use 
it up as it was paid in by the taxpayers. We say that is true, and is the reason for 
the existence of the fund; that if the spirit of the law under which appropriations 
have been made for the maintenance of the District of Columbia for many, many 
years had been adhered to during the war period there would be no such fund, 
and there would be no question whether it was a surplus or not, because it would 
exist in the District of Columbia in the form of school buildings which we do not 
have now, and in the form of improved streets where we have streets badly in need 
of repair, and other similar things. 

The Chairman. Mr. Colladay, is it your contention that this very balance which 
you claim on behalf of the taxpayers should be now expended in District improve¬ 
ments rather than used to provide a reduction in future taxation? 

Mr. Colladay. It may be used in either of two ways. I think the best use to put 
it to is to relieve the terrible deficiency in the schools, a great deficiency in the condi¬ 
tion of the streets, and any similar pressing municipal needs, and that it should be 
put in at the 60-40 ratio into appropriations. 

It may be readily and properly used as a part of the balance which must be raised 
under the existing law by the District of Columbia in order to go on a cash basis within 
the time specified by the law. 

Either way, the taxpayers of the District of Columbia would have the benefit of 
the money which they have paid, and nobody can controvert the fact that they have 
paid it. It was collected largely while the law provided that appropriations should 
be on the basis of half and half, and it should be dealt with, in so far as it was produced 
on that basis. In so far as it was produced on the basis of 60-40, which is now the 
permanent rule—^with which we are content—it should be dealt with and disposed 
of on that basis. 

As to the question raised yesterday by Congressman Johnson, based upon_ the 
language in the act under which your committee is proceeding, that your committee 
should proceed with a view to ascertaining and reporting to Congress what seems to 
have been expended by the United States and by the District of Columbia respec¬ 
tively, whether for the purpose of maintaining, upbuilding, or beautifying the said 
District, and so forth, and particularly directing my remarks to the suggestion by 
Congressman Johnson—speaking just to the substance of the thing and not under¬ 
taking to relate the words—that there could be no free surplus to the credit of the 
District, reportable by your committee, as long as there was a greater amount on the 
50-50 or the 60-40 basis of money expended by the United States for such projects 



248 FISCAL KELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


as the Lincoln Memorial, the Washington Monument, if built subsequent to 1874, 
the Key Bridge, because it physically lies on this side of high water mark on the 
Virginia shore of the Potomac River, we say, and petition your committee to report, 
for confirmation by Congress, the principle that the National Government is responsi¬ 
ble for the outlay for national projects, including national memorials to the national 
heroes or statesmen or other great men who have contributed to the upbuilding of 
this Government and our institutions, even when such projects add to the beauti¬ 
fication of the District of Columbia, and also for the maintenance and upkeep of such 
national projects. 

On this point the citizens of the District of Columbia rely on the committees of 
Congress, confidently, to see that justice is done in this respect and that they are not 
required to pay, in addition to their proportion of the municipal expenses, either the 
initial capital expenditure or subsequent maintenance costs for such national projects. 

From the transaction of business here yesterday I observed that your committee has 
caused to be made an abstract of the several reports and briefs which have been filed. 
In so far as references were then made to the brief of the Citizens’ Joint Committee, 
and to Mr. Tweedale’s technical commentary on the Haskins & Sells report, we con¬ 
sider that the committee has correctly apprehended our views, and I do not think it 
necessary at this time to make extended argument on those subjects. We believe that 
the whole matter should be adjusted by Congress upon recommendations of this com¬ 
mittee, striking a balance with the fund found by Haskins & Sells and corroborated by 
the various other experts who have been at work since your cornmittee was created; 
and we will be quite content that the long dispute be ended at this time by the report 
and confirmation, and the making available for use on behalf of the taxpayers of the 
District of Columbia, of the surplus balance shown by the Haskins & Sells report. 

If it is desired that we answer specific questions as to accounting matters, I will ask 
leave to have Mr. Tweedale answer. I am not an accountant. He is. I could not 
aid the committee on those technical questions. He can. 

But if there are general questions as to the attitude of the taxpayers of the District, 
I would be pleased to respond in so far as I am able. 

The Chairman. Do any members of the committee desire to ask Mr. Colladay any 
questions? 

Representative Evans. I would like to. I would like you, Mr. Colladayfor 
my benefit, to make a little more clear the attitude of yourself and of the committee 
which you represent, as to the amount you claim to be due under the present act 
of Congress, and that you or the committee forego any claim to that amount. Do 
you mean to infer that the act under which the committee is working is without 
force, or do you concede that it has force, but do you say that you and the citizens 
of Washington are willing to make a gift to the Federal Government of large amounts 
of money? 

Mr. Colladay. I do not know that I quite grasp the question in its entirety, because 
it has several phases. We believe that the act under which this committee. Con¬ 
gressman Evans, is proceeding, has absolute force. 

Representative Evans. Then, if I may interrupt you there- 

Mr. Colladay. Yes. 

Representative Evans. Do you mean that it has legal force? 

Mr. Colladay. Yes, sir. 

Representative Evans. My next question is, I think, plain. Notwithstanding 
there is legally due to the people of Washington an amount of money, you as their 
representative, and I presume with the knowledge of the citizens that you represent, 
are willing to give to the Federal Government that money lawfully and legally due 
you; is that the position? 

Mr. Colladay. There is no ascertained amount back of 1911 due the people of the 
District of Columbia, or the taxpayers of the District. In behalf of the United 
States, as testified here this morning by Mr. Spalding, a very careful effort has been 
from 1874 to 1918, except remaining items which he apparently could not officially 
made to find all possible items; and all items which Mr. Spalding could find in a searcn 
report—could not put into definite form—but which he says would amount to some¬ 
thing about $50,000 or $60,000; perhaps less, perhaps more, have been found and 
made of record against the District of Columbia, and paid. 

As I say, there is no ascertained amount due the District of Columbia. 

According to advices which I have from experts, including Mr. Tweedale, and I 
think this fact is corroborated by the report made by Haskins & Sells, from the amount 
of work that they have been able to do in the given length of time, it would take about 
five years of accounting effort to restate this account, working over the entire amounts, 
day by day, from 1874 to 1911, and it would cost approximately $100,000. 

As a matter of good business between these two parties, the United States and the 
municipality of the District of Columbia, I consider it wise that that be not done. 



laSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 249 


We know, we think, as the result of the work done by Messrs. Mayes and Mr. Spalding, 
that the United States has had all that is due it. We are willing to accept this balance 
as of June 30, 1911, and go forward under the new permanent 60-40 rule, as I have 
stated. 

The Chairman. Pardon me: do you mean June 30, 1911, or June 30, 1922? 

Mr. CoLLADAY. Well. June 30. 1922. That statement being qualified by what I 
have previously stated, that in so far as that money was paid or accumulated on the 
50-50 basis, it should be dealt with on the 50-50 basis, and in so far as it was accumu¬ 
lated on the 60-40 basis it should be dealt with on that basis. Does that answer your 
question? 

Representative Evans. Scarcely. Taking into consideration the facts you have 
just enumerated as apyiroximately correct, namely, that it will cost $100,000 to make 
the investisration- 

Mr. CoLLADAY. And five years’ time. 

Representative Evans. $100,000 and five years’ time~of course, the $100,000 is 
payment for the five years’ time—the District to pay either 50 per cent or 60 per cent; 
that would make the District’s amount either $50,000 or $60,000. Now, because of 
the payment by the District of $60,000, although you are satisfied that large amounts 
are due the District, you and the citizens of the District of Columbia are willing to 
make that as a gift to the Federal Government? 

Mr. CoLLADAY. No; I shall have to correct your method of presenting that, Congress¬ 
man, if I may. 

The $50,000 or $60,000 does not pay for the five years. The five years means that 
we would go on for five years more in our present unsettled state without having the 
credit of the $5,000,000 on the many millions we must raise in order to go upon a ca«h 
basis, and that we must go,also without the needed school buildings, without the 
needed road improvements, and other principal improvements necessary to this 
municipality, and it would certainly be "ood business on the part of the District of 
Columbia and its taxpayers to have this matter settled, to ha-^'e that $5,000,000 imme¬ 
diately available, to have the conditions of their children impreved, and to have the 
condition of the entire city improved to that extent, and to have the benefit of five 
years of certainty on top of that. That is my position. 

Representative Evans. You think, then, that the expenditures for schools and 
roads depend upon the determination of $5,000,000 or some balance in favor of the 
District of Columbia and not upon the decision of the appropriations as made by 
legislation? 

Mr. CoLLADAY. It may or may not. Certainly the $5,000,000 is a factor. Congress 
has shown that $5,000,000 or any other sum of dollars is a factor, by requiring us to go 
on the cash basis in a certain speAfic number of years. 

Representative Evans. It would not, so far as you can see, determine what you 
have for schools, would it? 

Mr. CoLLADAY. Not necessarily in theory, but certainly in practice I believe it 
would. 

Representative Evans. In the last two years, if I mistake not, you have had appro¬ 
priated for new buildings in this District between $4,000,000 and $5,000,000, have 
you not? 

Mr. CoLLADAY. I will not undertake to deal with exact figures, but I have knowl¬ 
edge of the conditions in the schools, where children have their school time, instead 
of the way that you had, a full day perhaps, or the way that I had it in the West, of 
a full day’s schooling, only a half a day or one-third of a day. 

Representative Evans. Do you think that is entirely because you did not have 
appropriations? 

Mr. CoLLADAY. Yes, sir. 

Representative Evans. Let me ask you just for my information, what amount do 
you think ought to be appropriated each year per pupil in the schools for new 

buildings? . . 

Mr. CoLLADAY. That is too technical a question of accounting for me to answer off¬ 
hand, but I do know this, Congressman Evans: I live in Chevy Chase, D. C. After 
an effort of several years we succeeded in having an 8-room school building enlarged to 
a 16-room building, and by the time that it was finished it was filled. Then, begin¬ 
ning with the year or the second year after it was opened, it has been overflowing, 
and they deal there with the problem I have stated, of half days and one-third days 
for the school children; and I know that that condition largely exists throughout the 
District of Columbia, and it ought to be relieved. . . , , 

Representative Evans. Is it true that there are districts where you have rooms in 

buildings that are not used at all? 

Mr. CoLLADAY. Yes. 


32894—S. Doc. 301, 67-4 




250 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF (COLUMBIA. 


Representative Evans. Because of a change in population? 

Mr. CoLLADAY. Yes. . 

Representative Evans. And there are some buildings where there are no pupils? 

Mr. CoLLADAY. Yes. 

Representatwe Evans. And the district that you have referred to is a district 
developing quite rapidly? 

Mr. CoivADAY. Yes; but the cases such as you cite of vacant rooms are rare. 

Representative Evans. They are using rooms for storage purposes, are they not? 

Mr. CoLLADAY. 1 know of one very old school building that is being used for storage 
purposes, down back of Corby’s bakery, back of Howard Ltniversity. 

Representative Evans. And there are some that are not being used at all? 

Mr. CoLLADAY. That may be so. That building back of Corby’s bakery is certainly 
fit for nothing but storage, and the District had to spend several thousand dollars in 
order to get it in condition so that they could safely use it for that purpose. 

Representative EvAks. Going nov»" to another proposition, there was a proposition 
presented, as I recall it, in the Senate, by which a certain sum or rate Avas to be levied 
upon the property of the District, the proceeds from that leA'y to be paid into the 
Federal Treasury and from the Federal Treasury, without regard to the amount of that 
tax levied, all amounts should be appropriated for the expenses of the District in all 
these various activities. Did that meet with the approA^al of the organization which 
you represent? 

Mr. COLLADAY. 1 do not think our organization considered it. 

Representative Evans. Whatever approval there Avas, either by the organization 
of Avhich yours is a part or Avhatever determination there A\'as, you took no action? 

Mr. Colladay. I do not recall any such action. 

Representative Evans. That is all. 

Mr. Colladay. The citizens’ joint committee has dealt Avith the question of projAor- 
tional appropriations, and now Avith the question of surplus. 

Representative Evans. One other question. Was there any item that you can noAv 
recall on AA'-hich the District paid interest, at any rate whatever, in Avhich the rate Avas 
not fixed Avhen the debt AA^as authorized? 

Mr. Colladay. I have no knoAvledge of such. Mr. TAA’^eedale, have you? 

Mr. Tweedale. No. 

Mr. Colladay. Major Donovan, have you? 

Mr. Donovan. No. As a matter of fact, the report of the Comptroller of the 
Treasury years ago held that the District could not be charged Avith interest except 
under an act of Congress directing interest to be paid. 

RepresentatiA e Evans. In addition there, Colonel DonoA'an: And the rate of 
interest was fixed in the act authorizing the debt? 

Mr. Donovan. In every case where the District has paid interest, the rate A\^as 
fixed in the act itself. 

Representative Evans. That is all. 

Mr. Colladay. I think it is well known that only by act of Congress could there be 
an interest liability as betAveen the United States and the District of Columbia—a 
legal liability. Certainly nothing could be collected or received by the one party or 
the other Avithout a legal liability. 

The Chairman. C^ongressman Evans, I fear that the members of the committee do 
not understand the purport of your recent statements relating to some property Avhere 
rental was to be collected. Is there a specific property that you had in mind? For 
myself, I do not quite understand it. 

RepresentatiA^e Ea^\ns. I did not mention any rental. 

Mr. Colladay. In the long question that Avas asked, near the end of Congressman 
Evans’ question to myself, I think that occurred. 

The Chairman. No; I am referring now to the question he has just asked. 

(The stenographer read the following question;) 

‘‘Going now to another proposition, there Avas a proposition, as I recall it, in the 
kSenate by Avhich a certain sum or rate Av^as to be leAued ujion the property of the 
District, the proceeds from that levy to be paid into the Federal Treasury, and from 
the Federal Treasury, without regard to the amount of that tax levied, all amounts 
should be appropriated for the expenses of the District in all these vaiious actiA-ities. 
Did that meet with the approAal of the organization which you represent?” 

The Chairman. All right. Is there any other question to 1)0 asked of Mr. Colladay? 

Mr. Colladay. May I suggest, in AueAV of a commentar}^ made by Congressman 
Evans off the record, that the question to me as to a certain proposition jiresented 
to the Senate refers to amendment No. 1, AvUich appears now on page 3 of the act of 
June 29, 1922? I do not think that his question correctly described that amendment. 

RepresentatiA'e Evans. I do not want to get into any dispute. 


F1S('AL RELATIONS BETWEEN U 


S. AND DISTRK’T OF COLUMBIA. 


251 


Mr. ('oLLAi)AY. No; but if it does refer to that amendment, why, then the oro-ani- 
zation that T represent did consider that amendment. I want to l)e correct in the 
record. Tt did consider that amendment while it was pending and did, throiio^h me 
have some communication with the members of the conference committee,'’and T 
called on Congressman Johnson himself and had two conferences with him The 
reason I am bringing this up is that I do not want to be in a seeming false i/osition 
my answer, and if Congrewssman Evans does refer to amendment Xo. 1. then T 
on answer yes; that we (lid consider it. 

Representative Evans. Then I would like an additional answer. What was the 
attitude taken by your associations on amendment No. 1, as presented in the Senate? 

Mr. Colladay. Do you mean, (Mngressrnan, as finally adopted and as it now appears 
in the act? 

Representative Evans. No; 1 say as presented in the Senate; amendment xXo. L as 
presented in the Senate, before conference. 

Mr. Colladay. We were dissatisfied with it. 

Representative Evans. Was there any representation made to either the Senate, 
to a Senator, or to the Senate committee, giving that attitude? 

Mr. Colladay. There was. 

Representative Evans. Signed by you? 

Mr. Colladay. Not sigmM by me. 1 personally conferred with members of the 
conference, not once but several times. 

Representative Evans. W^hen you speak of conferring on that amendment, did you 
see Congressman .Johnson with reference thereto? 

Mr. Colladay. Yes; as I stated awhile ago, I had two conferences with Congressman 
Johnson on that subject—quite full conferences. 

Representative Evans. Now I wish to be clear myself, not because you have not 
been, but so that I may be correct. In speaking of amendment No. L*do you mean 
the amendment as it is incorporated in the appropriation act, at present, and enacted 
into law? 

Mr. Colladay. I would prefer to answer in a general way. From the time amend¬ 
ment No. 1 was first brought out until the conference report was presented to both 
Houses and adopted, I had freciuent conferences with members of the conference com¬ 
mittee, the two conferences with Congressman .Johnson, which I have mentioned, 
one at the liouse of Representatives and one at his office, in an effort to have amend¬ 
ment No. 1 revised into what the citizens’ joint committee would consider a satis¬ 
factory form; and we did not accomplish a great deal in that line. There were some 
modifications made of it, and that is about all that can be said on the subject. 

Representative Evans. That is all. 

(At this point the statement of Mr. Colladay was suspended in order that the com¬ 
mittee might hear Representative Crampton, whose time was limited.) 


Statement of Hon. Louis C. Cramton, A Representative in Conijress from 

THE State of Michigan. 


Re])resentative (Jramton. Mr. Chairman and gentlemen of the committee, 1 
have not in mind any lengthy statement, but 1 have a great interest in the work of 
this committee, and the subject matter that is in its charge, and I had had some 
connection Avith the act which created the committee, and I thought possibly it was 
desirable to bring to the attention of the committee or to emphasize Avhat has already 
been before the committee as to what some of us in the House had in mind as to the 
scope of work of the committee. 

It seemed to me better to speak now before the committee while it is at work, rather 
than to leave the observations, possibly, as the basis of criticism when the committee 
had finished its labors. 

This whole matter grows out of the fact that the expenses of the government of the 
District of Columbia, which in the main is a city, have not for a number of years b(3en 
paid as the expenses of most cities are paid in that there has been a contribution 
from the Federal Treasury for that purpose. Under that system that obtained for a 
number of years, the law from year to year carried provisions that 50 per cent of the 
expenditures should be from the Federal Treasury and 50 per cent from revenues 
collected from the District. At the same time there were some provisions of law for 
the collection of such revenues from the District by taxes, licenses, etc., and, as 
you gentlemen are so well aware, the amount collected liom the District loi sonie 
years was greater than the amount chargeable against the leAonues through the a])- 
propriation acts, and that balance has been urged by the citizens of the Distiict as a 
claim against the I^ederal Government. It is spoken of as a surplus. 


252 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


What I want first to emphasize is this, that there is no legal claim against any money 
in the Federal Treasury on that basis. There can be, perhaps, urged an equitable 
claim, but there is no legal claim; no law on which the people of the District can base 
a claim to certain money in the Treasury of the United States, or to a certain amount 
of money even if it be ascertained as to its definite amount. It is in the nature of an 
equitable claim. 

There has been a controversy that is very regretable between the Federal Govern¬ 
ment and the people of this District, for many years growing out of our fiscal relations. 
The appropriation act of 1922 went a long way to adjust those differences by settling 
several questions. 

There not only had been a controversy between the Federal Government and the 
District, but there had been more or less controversy between the Senate and the House 
as to the proper way to settle these matters, and in different years the District bill was 
held up until the last minute through a dead drawn contest of the two bodies as to the 
proper fiscal policy, and this 1922 act went a long way to do away with the differences 
between the two Houses of Congress and between the Federal Government and the 
District. In working out that act the views of both the Senate and the House had to 
be considered in order to get a settlement that would be accepted by both bodies; 
and I want to urge that every provision that was included in that attempted settlement 
in the act of 1922 should be given equal force, is equally binding upon the committee. 

I think I can say there was a more pronounced sentiment in the Senate toward 
some recognition of this surplus than existed in the House, but what appeared in the 
act of 1922 was in the nature of a compromise. It was accepted by both bodies, the 
creation of this committee, and so the views of those in the House who accepted this 
legislation with certain amendments should have equal consideration by the com¬ 
mittee, and I am sure they will have if you get the point of view of what we had in 
mind, with the views of those who were most interested in establishing a surplus. 

In connection with this act of 1922 I want to emphasize to the committee that the 
section on page 3 of the draft of the law which I have in my hand directed this com¬ 
mittee to do two things and not one. I may say that this provision, as I think Repre¬ 
sentative Johnson stated to you yesterday, was drafted by Representative Johnson 
in conference. I had been put on the conference to fill a vacancy due to the absence 
of Representative Evans, and I went over the matter thoroughly and fully with 
Representative Johnson to get his views at that time, and some amendments were 
put upon Mr. Johnson’s draft, not to change its purpose, but to clarify and make more 
certain its action. Those amendments that were intended to clarify I suggested to 
Mr. Johnson, and they were accepted by him, so that I have some familiarity with 
this section of the bill, and a very intimate connection with it, that enables me to say 
what was in the minds of the House conferees. I realize that what was in the minds 
of the House conferees is not law unless we succeeded in getting language that expressed 
it. I want to suggest that we did succeed in getting language that properly ex])ressed 
what was in our minds; and having done so, if we have done so, I want to urge that 
your committee do not fail to give as much weight to one part of the section as to 
another. 

There are two things that this act provides for: First, speaking of the joint select 
committee to be selected in a certain way, it is to do two things. This is preliminary. 
They are generally to “inquire into all matter pertaining to the fiscal relations between 
the District of Columbia and the United States since July 1, 1874.” That is very 
definite language. A date is definitely fiyed, and the duty of this committee is to 
inquire into all matters pertaining to the fiscal relations between the District and the 
United States since July 1, 1874. There is no other date that this committee has any 
authority to accept. 

The act that creates this committee has fixed the date, and has fixed the scope 
of the work to be performed by the committee; that is, to “make an inquiry into all 
matters pertaining to fiscal relations between the United States and the District of 
Columbia since July 1 , 1874.” 

Now, what is the purpose of that fiscal inquiry? It is a twofold; one, “with a view 
to ascertaining and reporting to Congress what sums have been ei’pended by the 
United States and by the District of Columbia, respectively, whether for the purpose 
of maintaining, upbuilding, or beautifying the said District or for the purpose of con¬ 
ducting its government or its governmental activities and agencies, or for the furnish¬ 
ing of conveniences, comforts, and necessities for the people of said District.” That 
is first. 

Then we have, second, the following: 

“And the committee shall also ascertain and report what surplus, if any, the Dis¬ 
trict of Columbia has to its credit on the books of the Treasury of the United States 
which has been acquired by taxation or from licenses.” 


IISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 258 

And then the committee is required to report its findings with respect to all the 
matters hereby referred to to the Senate and the House, at a certain time. 

i^ow, the twofold purpose of that inquiry it is my desire to emphasize. This com¬ 
mittee is dealing ^uth a proposition in equity, and it was the desire of Mr. Johnson 
and myseli and others that this inquiry, dealing with a proposition in equity, should 
fully cover everything that might affect the equities of the case. So that this com¬ 
mittee 18 to report not only its findings as to what particular financial balance there 
is and its findings as to what is the amount of surplus, if there is any, equitably due 
toe District frcm the Federal Treasury, but the committee owes a greater duty to 
(.congress than that. They are to transmit to Congress information of all these financial 
transactions between the Federal Government and the District that might have a 
bearing on the equities of this case. So I am going to emphasize the first provision 
rather than the second one. 

I only want to say this, now that I have been mentioning the second provision, as 
to the finding as to surplus, that the function of the committee is not as an arbitrator 
that can make a finding that will have a legal, binding effect; it is a committee to 
take testimony and report its findings. But let this committee make its finding that 
there is $1,000,000 due the District, or that there is $5,000,000, or that there is $10,- 
000,000 equitably due the District: that is only a finding. It is not an award. Con¬ 
gress eventually must legislate before the District can make use of that money for 
any purpose; and then, when Congress does legislate, if this committee should find 
that there is a surplus equitably due the District, and if Congress should eventually 
legislate to devote that amount of money to the use of the District, Congress will at 
that time, 1 assume, decide the use to which it is to he put. It might then, assuming 
that there is a surplus that this committee finds is equitably due the District, devote 
it specifically to building schools, or to some other particular purpose. It might 
devote it to the general appropriation purposes for the Distrifd and thereby lessen 
taxation for a period. It might turn it to the building up of the reserve that is neces¬ 
sary to lu-ing us, I think in 1927, on a pay-as-you-go basis. 

And in connection with that I want to emphasize this, in view of a remark made 
by Mr. (’olladay, that this same act that provides for the creation of that reserve by 
1927 specifically provides how it shall be built up and absolutely negatives the idea 
that the District authorities have any right to take into contemplation at the present 
time or under existing law in the building up of that reserve any possibility as to 
the finding of a surplus. That surplus does not exist as yet in such a form that the 
District authorities have any right to consider it in the levying of the taxes and the 
building up of that reserve, because the act says this. I will omit the unessential 
parts and just give the essential language. It says that “there is hereby levied for 
each of the fiscal years ending June 30, * * * 1927, a tax” on real" estate and 

tangil)le personal property which will, when added to other revenues specified, “pro¬ 
duce money enough to pay such annual expenses as may be imposed on the District 
of Columbia by the Congress; and in addition”—now, this tax shall be enough to 
take care of the annual expenses—and in addition “to such annual expenses a 
surplus fund sufficient to enable the District of Columbia to get upon a cash paying 
basis by the end of the fiscal year 1927.” 

So that year by year now as the District authorities are levying their taxes they 
must under the law levy enough tax to take care of the annual expenses and to build 
up this reserve, and they can not legally contemplate any possibility of a finding 
by ('ongress some time or other as to an existing surplus from prior years. 

Now, take the language in regard to the joint select committee, which is as follows: 

“With a view of ascertaining and reporting to Congress what sums have been ex¬ 
pended by the United States and by the District of Columbia, respectively, whether 
for the purpose of maintaining, upbuilding, or beautifying the said District or for 
the purpose of conducting its government or its governmental activities and agencies, 
or for furirishing of conveniences, comforts, and necessities to the people of said 
District.” 

I am not going too far when I say that if that language had not been contained in 
the bill this section would not have been enacted. The House could not otherwise 
have accepted this provision, it being the theory of the House conferees that this is 
a proposition in equity. And, if w'e are going to dispose of it, then it ought to be dis¬ 
posed of and out of the way; but when it is disposed of as an equitable proposition 
everything that affects the equities of the Government ought to be taken into 
consideration. 

Now, how wide is this language? In my judgment every expenditure since 1874 
that the Federal Government has made that has resulted in any of these things should 
be ascertained and reported to the Congress. That may include items that none of 
us think should be chargeable to the District now any more than heretofore. J’o 


254 


FISCAL RELATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


illustrate, I just want to give you an illustration of what 1 think this means. I know 
what it was intended for. It was discussed at the time and this illustration was used. 
The Lincoln Memorial, said to be the most beautiful memorial ever erected to any 
man, is located in the city of Washington. It beautifies the city of Washington; 
it beautifies the District of Columbia. ^‘Whether for the purpose of beautifying said 
District etc. 

Now, that memorial could have been erected out in TIepresentative Johnson’s 
district, where I think Lincoln was born. It could have been erected in Illinois, 
where he is buried. But, very properly, it was erected in the Capital of the Nation, 
to do two things, first to show the respect and love of the Nation for Lincoln, and 
incidentally to beautify this District, because we all look upon the District as a national 
affair, and it has a national aspect and we want the District made the most beautiful 
city in the world. 

Senator Harris. Mr. Cramton, would you mind my interrupting you right there? 

Representative Cramton. No, sir. 

Senator Harris. I was away at the last session; I have had other committee work 
that has kept me from being present. Now, I wonder as to your idea of the Lincoln 
Memorial. 

Representative Cramton. I am going to expound that a little further; I think I 
know what you have in mind. 

Senator Harris. I wanted to get your idea as to that. 

Representative Cramton. Yes. Now, that is an expenditure that beautifies the 
District, and it has that purpose in part, and hence it should be reported to the Congress 
under the act that created this committee. But I think none of us—certainly I 
would not and I think none of us would—take the position that any part of the cost 
of that memorial should be charged to the District now any more than heretofore. 
That is to say, that no part of it should be taken into account by the committee in 
arriving at an existing balance equitably due the District. 

The Chairman. But we understood you to say—at least I did—that the cost should 
be inquired into, and that that cost should be reported to Congress. 

Representative Cramton. Yes. Now, that is just what I wanted to emphasize, 
and I have taken an extreme case because I think it is one on which we will all agree. 
The Lincoln Memorial was, in part, erected for the beautification of the District, and 
hence under the first part of this, this committee should report the expenditure to the 
Congress as one of the items since 1874 that has been expended by the United States 
for the purpose of beautifying the District. 

The ('hairman. Pardon me, did I understand you to say that the conferees on 
the part of the House used that very monument as an example in framing this language 
as it appears in the act of June 29, 1922? 

Representative Cramton. In our discussion? 

The Chairman. Oh, no; with the conferees on the part of the Senate? 

Representative Cramton. Yes, among ourselves; but 1 think there was no dis¬ 
cussion with the Senate conferees on this. 

The Chairman. There was no discussion. 

Representative (’ramton. No discussion on this part of it. Now, that was what 
was in our minds; and if the language does not state what was in our minds, it has no 
effect; and I only make use of that illustration to emphasize clearly what was in the 
minds of Mr. Johnson and myself. 

The Chairman. Now let me ask you this: Having those provisions in mind, your 
committee must have been conscious of the fact that it would be impossible for any 
joint select committee to make such findings within the short period of time left to 
them under the amendment, which is to the first Monday in February. Let me ask 
if that question of the time required to make the investigation was carefully considered 
by the conferees on the part of the House? 

Representative Cr.\mton. It is mv recollection that the date for report as it passed 
the Senate was the 1st of January. At the suggestion of the House conferees the time 
was extended to the 1st of February, and because we did realize that it was a big task 
given the committee, and we felt that it should be extended as far as possible in this 
Congress. 

Rei)resentative Hardy of Colorado. On that point- 

Representative (’ramton. I do not want to get away from the chairman’s question. 
I want to answer the chairman first. 

Representative Hardy of Colorado. What I have to ask there is right on that. 

Representative Cramton. I \vant to answer that. 

Representative Hardy of Colorado. On that point, ('ongressman Johnson gave 
some illuminating facts and brought out the fact that the Mayes report he thought 
was incomplete and not worthy of serious consideration, and that we ought to go into 


FTSC'AL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 255 


it moie deeply and more completely than they did; and he brought out the fact that 
he was chairman of that subcomniittee that had that work done, and it took three years 
« to bring in what he called that incomplete report; so that we ask the question, what 
youi committee expects of this joint select committee when it is given, to cover 
a period of 50 years of time, a smaller amount of money and a much less time to do 
the work? 

Representative ( ramtox. Of course, Air. Johnson has more familiarity wdth many 
of those details than 1 have. I w'ould suggest, how'ever, that it is possible that the 
portion of the law that I am emphasizing would not involve anyw’here near the amount 
of detailed research and expenditure of time or money that the other sections does. 

Representative Johnson of Kentucky. That is exactly what 1 suggested yesterday. 

Representative Cramton. I was not present, 1 am sorry to say, yesterday; but 
that is a matter that the appropriation acts themselves will very largely disclose, with 
the familiarity that you gentlemen here have with the District and District matters. 
But be that as it may, the work that is imposed upon this committee, to accomplish its 
purpose, must be a complete job; and the committee must take one part of that section 
as a direction as much as another, and if they do not, then it is subject to the charge 
that it is not complete, that it does not furnish to Congress the information that it w^as 
directed to furnish, and the report will be subject to that attack. 

Nowq let me complete my illustration of that first language. I want to emphasize 
that the language was not put in with the idea of asking so much that the time used 
would defeat the purpose of the measure. That was not the idea, and I do not concede 
that it would. The date was definitely agreed upon—1874. That was a House amend¬ 
ment, going back further than the Senate provision, and the data, whatever that re¬ 
quires of bookkeeping and accountants, I am not familiar with. If it is going to be 
done, it has got to be done right. 

Now, the Lincoln Memorial being erected by an expenditure by the Federal Gov¬ 
ernment, in part for the beautifying of the District, should be listed in the report from 
this committee of Congress, but should not be taken into account as one of the items 
chargeable to the District in arriving at your idea of a surplus. Now, that is an ex¬ 
treme case; and then they will grade all the way dowm through, to some items that 
possibly Air. Johnson may have mentioned yesterday, where they ought to be taken 
into account, and so clearly the equities would require their being taken into account 
in the determination of this surplus that none of us would disagree to it. 

In between the Lincoln Alemorial and the other class there will be items on which 
we would disagree, on w^hich Congress may disagree, and they will affect the equities 
of the case, and when the time finally comes for the Congress to legislate and legally 
fix the status of this surplus, and if this cofnmittee’s findings make it effective and 
available for District purposes being an equitable question, the Alembers of (^ongress 
are entitled to have before them all the information that affects the equities and in¬ 
fluences their votes. 

There is a case that 1 will call attention to as an example that is on the border—in 
between—and on which we may disagree. After the ('ivil War all the colored folks 
came rushing up here to Washington. They were free. 

Senator Harris. Excuse me for interrupting, but I am very much interested in 
what you say. Before leaving the matter of the TJncoln Alemorial, would you include 
the Grant Alemorial, may I ask? 

Representative Cramton. Yes, I think so; in the list. 1 took the case of the 
Lincoln Alemorial as the most conspicuous. 

Air. CoLLADAY. Alay I suggest a thought there, ('ongressman (hamton? 

Representative Cramton. A"es. u j • r 

Mr. CoLLADAY. I would be interested to know what the ('ongressman would do with 
the distribution of lands held in trust on w^hich these structures are erected. 

Representative Cramton. Now, my purpose, Mr. Colladay—and I do not want to 
take too much time—my purpose in coming here is not to assume the functions of the 
committee or to assume to lay down rules for the committee as to all these matters, oi 

to make plans for them. . . ........i * 

I am frank to say that not only it would not be in good taste tor me to attempt that, 

but I have not the information to do it. What I meant to say, and what the language 
of the act is and what the duty of the committee is, is to work out one problem or one 

class of things, as well as the other. , • , . i 

Now I want to take an illustration just in between, and on which I have an opinion 
which may not agree with that of others here. After the war the colored folks came in 
here to Washington. They called them freedmen, and there was a national problem 
in caring for those colored folks that came to Washington. It was nqt primarily a 
Washington problem but it was a national problem. They had their Freedmen s 
Bureau and one thing and another, and one of the outgrowths of that was the I reed- 


256 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


men’s Hospital in the city of Washington, which originally was properly a national 
function. To-day it is a local function absolutely. There is very little, if any,* 
national interest in that institution; and still it has been conducted, with the excep¬ 
tion of a little ^riod, always as a national institution, and the Federal Government, 
in the Interior Department appropriation bill, is carrying a hospital here in Washing¬ 
ton. 

A few years ago the Federal Government, with no contribution from the District, 
put up, if I remember, about 1600,000 worth of buildings at that institution. The 
District did not contribute a nickel. It is a hospital where colored people mostly 
are sent; there are a few whites, but they are mainly colored people. 

Senator Harris. And they are colored people who reside in the District? 

Representative Cramton. Not entirely. 

Senator Harris. They do not come from other places. 

Representative Cramton. Of course that is argument; but, on the contra^^^ they 
come from other States. 

Senator Harris. Do they actually come from other States? That is what I wanted 
to know. 

Representative Cramton. I have not the figures, but actually the attendance of 
inmates in the year will run about 2,700, perhaps. Of that number the residents 
would be about 700 or 800 from the District. There would be about 700 or 800 or 900 
from Maryland and 500 or 600 from Virginia. I know those figures are not quite 
accurate, but they give you the idea. 

Senator Harris. Yes. 

Representative Cramton. And then there are two or three hundred from the rest 
of the country. Now, I will guarantee that there are not over 50 or 100 out of the 
2,700 where the kYderal Government has any equitable responsibility. I do not 
want to take too much time on this, but there will be cases in Georgia perhaps or in 
some other Southern State, where there may not be sufficient hospital facilities for 
colored persons, and they may come up here and get treatment; but that is a rare 
exception. When it occurs it could be cared for by placing authority in the Secretary 
of the Interior or some one else to provide for admission on a per capita basis to this 
District institution. 

On the other hand, a great number come from Maryland and Virginia and other 
places, and they are the class of cases that if they happened in Detroit, for instance, 
would be cared for in Detroit, no matter \\here their official residence was. They 
are not at all cases of chronic disease. But we ivill say that some colored person in 
Washington or from Maryland is taken ill, and they have got to send him somewhere, 
and he is indigent. In that case that is incident to the District of Columbia, because 
a colored person in the District who falls sick has to be sent to a hospital, and then the 
department pays the expenses of that short emergency illness, fi'hey may be from 
Maryland, claiming a residence there, but they are the colored people of Washington, 
and we are appropriating year by year out of the Federal Treasury and in our current 
appropriation bills, for that. 

With no objection from anyone there is carried a provision for the erection of a new 
pathological laboratory which is to be paid for 60-40, 60 per cent from the District; 
and no one protested or objected in any way whatever to that language in the bill. 

Mr. CoLLADAY. May I suggest the thought, before you leave that subject- 

Representative Cramton. Just let me complete this. As to that item, it is for 
this committee to decide whether expenditures for that institution, the Freedmen’s 
Hospital, should be taken into account in the balance that you are going to strike 
between the Federal Government and the District in this equitable proceeding. 
But the law^ requires you to report those expenditures to Congress, because that is 
an expenditure that is “for tlie purpose of conducting the governmental activities 
and agencies of the District, or for the furnishing of conveniences, comforts, and 
necessities to the people of said District.” 

Now what was it, Mr. Colladay? 

Mr. Colladay. I w^anted to ask if you have taken into consideration, in what you 
have just stated, the fact, wdiich 1 am informed is a fact, that the hospital you have 
just been discussing is the hospital in which the medical students of Howard Uni¬ 
versity are trained? 

Representative Cramton. Yes. 

Mr. Colladay. And which is the only class A medical school for colored students in 
America? 

Representative Cramton. Yes. 

Mr. Colladay. And therefore this hospital and the school are for the wffiole United 
States. 



FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 257 


Represontativo Cramton. Yes. Now I want to emphasize that there is an item 
ahout which you can argue, and you can have a difference of opinion as to whether it 
should be figured in the balance sheet. There can not be any argument about the 
proposition that it cornes within the language I have referred to, and should be reported 
to Congress', and also it should have consideration in striking a balance sheet. As to 
this particular proposition, I am familiar with that, perfectly. It is a convenience to 
Howard University Medical School, just as Howard University is a convenience to it, 
in furnishing some internes, etc., and they would continue to be just as much of a 
convenience, one to the other, whoever paid the bill for Freedmen’s Hospital. A 
medical school can not exist without a hospital. 

Mr. CoLLADAY . Just SO, and I might point out that that is the only first-class medical 
school training colored physicians and surgeons for the twelve or fifteen millions of our 
colored population in the United States. 

Representative Cramton. It is a great advantage to the hospital to have the medical 
school there, considering internes and training of nurses, etc. But that relationship 
would not be affected at all by having the District pay the bills for its own hospital. 

Senator Harris. I just started to say that of course these medical students could 
get the same training, and all, and their information, from a District hospital. 

Representative ('ramton. Certainly. 

Senator Harris. In my State, the State has a medical college and university at 
Augusta, Ga., and of course, the Augusta hospital which is controlled by the city is 
used by these students; and, in turn, the medical school is of use to the hospital. 

Representative Cramton. Exactly, and I presume in all the States. 

Now. without going into too many of these instances and without putting too many 
of these illustrations before you, because I wanted to make distinction between the 
, lines of the two phases of your work, an interesting case, of course, is the Union Sta¬ 
tion, which is not only a necessity for the District, but is a convenience, tremendously 
so, and on which some $5,000,000 to $8,000,000 of Federal money was spent. 

Representative Johnson of Kentucky. You mean for the land? 

Representative Cramton. Yes; the land for the establishment of that Union Sta¬ 
tion. And, as I understand, the District of Columbia did not contribute a nickel to 
the building of that station, which is a tremendous convenience, and in addition it 
is for the beautification of the city. 

Mr. Johnson corrects me to this extent, that there was one contribution in which 
the District participated. 

Mr. Donovan. The District paid one-half of $4,000,000 in connection with the 
improvement. 

Mr. CoLLADAY. And also the streets which (\)ngressman Johnson concedes, I be¬ 
lieve, by statements in other records, to be held by the United States in trust for the 
District of Columbia, were contributed. 

Representative Cramton. Of course, 1 am just furnishing some illustrations of 
what I am getting at. 

Representative Hardy of Colorado. To literally comply with that section which 
vou have brought to our attention—and perfectly properly, of course—but to literally 
comply with that would be merely to make a list of the appropriations which have 
been e*nacted for the use of the District of Columbia for the maintenance of the gov¬ 
ernment and its activities from 1874 down to the present date. It would be just a 
list of appropriation bills from the beginning to this date. 

Representative Cramton. Not so difficult to do. 

Representative Hardy of Colorado. I am saying that it would be merely a list of 
every appropriation that has been made, 50-50 or anything else, in connection with 
these activities. 

Representative Cramton. (’ertainly^ 

Representative Hardy of Colorado. And then analyzing those? 

Representative Cramton. Yes. . . . 

Representative Hardy of Colorado. Now, you go on about the interest, it that is 
found to be due. We got into a discussion of the difficulties of that the other day 
and some thought that it was not difficult to figure the interest, but it is merely a 
(question of morals. Six men out of twelve may not consider it a moral (question, 

while the other six men may. . 

Representative C^ramton. I am not going to discuss the interest question. 

Representative Hardy of Colorado. What you think we ought to do is to furnish 

a list of the appropriations from 1874 down to date? 

Representative Cramton. What I think you are required to furnish is what seems 
to have been furnished by the United States and the District of Columbia, respec¬ 
tively “whether for the purpose of maintaining, upbuilding, or beautifying the said 
District, or for the purpose of conducting its government or its governmental activities 


258 FISCAJ. UKLATIONS BETWEEN V. S. AND DISTRK’T OF (,'OLUMBIA. 


and agencies, or for the furnishing of conveniences, comforts, and necessities to the 
people of said District.” 

Now, the Government has not been so much worried about this as the people of 
the District. They claim that there is equitably an amount of money due to them, 
and they were insistent on having something of this kind, and having this committee, 
and we who did not feel that the equities were strong for them, who felt that if every¬ 
thing was gone into thoroughly it would demonstrate that there was no equity due 
the District, we urged language such as this in order that the whole situation should 
come before Fongress; and the committee can not accomplish its purpose and settle 
this thing by simply taking one provision and saying, “We have not time to do the 
other.” 

The Chairman. Mr. Cramton, in the earlier portion of your remarks, speaking to 
the free balance as shown on the books of the District and the Federal Government, 
the balance being approximately $4,600,000, you referred to that as a balance to which 
the District might have some equitable claim if no legal claim, if I understood you. 
Is that correct? 

Representative Cramton. 1 referred to this language in the law: 

“And the committee shall also ascertain and report what surplus, if any, the Dis¬ 
trict of Columbia has to its credit on the books of the Treasury of the United States 
which has been acquired by taxation or from licenses.” 

I did suggest that there was no legal claim to any money in the Treasury of the 
United States. . 

The Chairman. Yes; but there might be an equitable claim? 

Representative Cramton. Yes; there might be an equitable claim, and that is what 
we want to ascertain. 

The Chairman. Now, I presume you had in mind the adjustment over the period 
of time from 1902 to 1910, during which the expenditures of the District, and charged* 
to it, exceeded its proportionate share to the extent of some $4,144,000, which, after 
examination by Congress, v^as found due by the District to the Federal Government, 
and which the Congress ordered should be paid by the District vdthin the five years, 
and which payment M^as made, together wdth interest. Was that shortage at that 
time an equitable claim on the part of the Federal Government solely or was it a legal 
claim against the District, in your judgment? 

Representative Cramton. Well, I think it is quite immaterial at this time. What¬ 
ever it M^as, it was paid, and the change was made. 1 am not familiar with that. 1 
have made no examination of the law you refer to—at least not recently. 

The Chairman. Would the fact that in ordering that charge against the District 
the Congress also ordered that interest at the rate of 2 per cent on annual balances 
should be charged to the District and paid by the District, and as a matter of fact 
they were so paid, the amount being over $586,000, indicate to you whether or not 
that shortage was a legal claim or merely an equitable claim on the part of the General 
Government against the District government? 

Representative Cramton. I will say I have not made a recent examination of 
those matters, and 1 am not here to urge as to them. 

The Chairman. 1 am asking for your opinion. 

Representative Cramton. Whatever might be my opinion does not affect the con¬ 
struction of this language, of this present law, as to the work of this committee. This 
committee is required to inquire into all matters; not to accept this report or that 
report that somebody heretofore has made, but it is required “to inquire into all 
matters pertaining to the fiscal relations between the District of Columbia and the 
United States since July 1, 1874,” and then, to make it clear as to what should be 
he scope of that inquiry into fiscal matters, it is definitely stated that the committee 
shall report to Congress what sums have been expended by each, the United States 
and the District, for certain purposes. 

The Chairman. Yes. 

Representative Cramton. And 1 am here to emphasize that that language was not 
accidental, that it was to make clear the scope of the inquiry that the House had in 
mind. 

Senator Ball. You do not think this committee can accept, where reports are 
made, and Congress has acted on those reports; where Congress has acted by various 
appropriations ? 

Representative Cramton. The committee must take the responsibility. The 
direction of the law is not that you shall ascertain what reports have been made to 
Congress or what the action of Congress was on them but that you shall “inquire into 
all matters pertaining to the fiscal relations between the District of Columbia and the 
United States since July, 1874,” with a view to reporting to Congress certain things. 
Now, these things have not been reported to Congress heretofore. 


FISCAL RELATIONS BETWEEN 


U. S. AND DISTRICT OF COLUMBIA. 


259 


Representative Hardy of Colorado. 1 would say from your discussion, then, that 
‘this i;omniittee might take the liberty of reporting to Congress certain expenditures 
made, and this committee might take the liberty of saying that we think this ou^ht 
to bG an offsGt, or that wg do not think it ought to bG an offset, if that is vour view. 

IvGprGSGntativG C ramton. Not only that you might take the liberty, but you are 
required by the law to do that very thing. 

^ Representative Hardy of Colorado. And therefore we might make a report. I am 
Just getting at what you folks think we ought to do, because you folks undoubtedlv 
have great power over in the other end of the Capitol. 

Representative Cramton. That is quite an assumption. 

Representative Hardy of Colorado. Greater than the members of the House Com¬ 
mittee and this body. 

Representative Cramton. No, we would not agree with you on that. 

Representative Hardy of Colorado. I am just trying to arrive at this conclusion. 
So that, according to Mr. Cramton’s and Mr. Johnson’s view, particularly Mr. (.’ram- 
ton’s thought, he thinks we ought to make a list of those appropriation bills, from 1874 
down to date. 

Senator Ball. Going how far back? 

Representative Cramton. To July I, 1874. 

Senator Ball. Not back to 1872? 

Representative Hardy of Colorado. No; the act says 1874. And this act says that 
this committee should find what it does find to be due from 1874. I am just getting at 
what he says he thinks; that we ought to make this report as to the expenditures for 
the purpose of maintaining, upbuilding, or beautifying the said District,” that is one 
thing; and then he says, on the matter of interest, when it comes to the moral obliga¬ 
tion, that is the opinion of some man or men. Legal obligation is specific; that is 
-another thing. 

The third thing is that this committee is required to make such offsets as it thinks 
should be made against any apparent surpluses, and deduct the one from the other 
and report what the committee finds the surplus to be. Is that about right? 

Representative Cramton. In general, although I would not want to be committed 
to the statement that you would fully accomplish the purposes by simply listing appro¬ 
priations, because in the first place there were appropriations made prior to July 1, 
1874, that were not expended until after that. Those, of course, must be reached. 

Furthermore, an appropriation does not always result in an expenditure, and you 
must check to see if expenditures were actually made as appropriated. But whether 
you do it from appropriation acts, it is your duty to find what has been expended by 
the United States for these purposes since July 1, 1874. 

Representative Evans. And the District, too? 

Representative Cramton. Yes. I am of course, emphasizing the Federal Govern¬ 
ment. It is true also of the District. 

Senator Ball. You say an appropriation does not necessarily mean an expenditure: 
but are there any appropriations of the nature of permanent appropriations con- 
•sidered in this proposition at all? I know we make permanent appropriations in the 
river and harbor act sometimes, but I think that is the only class, so far as I know. 

Representative Cramton. There are permanent appropriations in the District, 
I think, that are annually available. 

Senator Ball. That do not revert back into the general fund? 

Representative Cramton. I did not know just what you meant by permanent 
appropriations. 

Senator Ball. All appropriations with the exception of those spt^cilically stated 
that shall be continuous appropriations, as in certain river and harbor acts, revert 
back to the general fund; and then they go back, I take it, in the proportion of the 
appropriation; so that I do not see why that should be a matter of dispute at all. 

Representative Cramton. For instance, if $100,000 is appropriated to construct a 
certain building, and the building is constructed, I do not suppose this often happens, 
but it might happen that it is constructed for $90,000, and the $10,000 was never 
used, then of course that $10,000 ought not to be charged. 

Representative Hardy of Colorado. Did you ever hear of such a thing? 

Representative Cramton. I think that in 50 years it might have happened. 

The Chairman. Mr. Cramton, I do not believe that our discussion as to the action 
taken regarding a shortage in the years 1902 to 1910 was as conclusive as eithei 3 'OU 
or I would like to have it made in the record. To state the proposition in this form. 


Representative Cramton. If you will pardon me, Mr. Chairman, I have just, 
since I came here, refreshed my recollection as to the language here which I came 
to speak about. As to the other matters which your committee have been at work 



260 FISCAL RP:LATI0NS between U. S. and district of COLUMBIA. 


upon for several months, you have had your attorneys and your accountants, and I 
have understood that you had pretty well completed some phases of it and I had 
assumed that your policies were fixed as to some of these features and I have not 
made any examination or given any thought or consideration to the question, but I 
do not want to finally commit myself on any proposition just now, without any exami¬ 
nation or consideration; but as to the part that, to be perfectly frank with you, I 
feared that the committee had not quite realized, which 1 came before the com¬ 
mittee to emphasize it, was this first function here. 

The Chairman. The committee has, of course, given attention to the language 
of the act from the inception of the work, which began immediately upon the appoint¬ 
ment of the joint committee. 

Representative (hiAMTON. I would not want to infer that you did not. 

The Chairman. It was a simple question that I proposed to put to you, Mr. (’ram- 
ton. 

Representative (.'ramton. Very well. 

The Chairman. It was this. Admitting, as we must, I think, upon the record, 
that there was a shortage on the part of the District, which was found due the Fed¬ 
eral Government, which had accrued during the years 1902 to 1910, and the Federal 
Government ordered that to be repaid with interest, is not that in the same category 
as an accumulation from taxation and rentals and privileges and licenses, accruing 
over another period of years, building up a surplus in favor of the District? M here 
is the distinction, if any? 

Representative Cramton. I will try to make the distinction. 

The Chairman. Yes; that is what I want. 

Representative Cramton. A father has a son to whom he has been very kind 
financially, as he has set him up in business two or three times and he has given him 
money. Sometimes he has just given him money as a father might to a son, with no 
expectation of getting it back, but just to help him develop. Sometimes he has 
given it to him on an express understanding that it should be repaid; it might have 
been on a note. But the son did not emphasize as much as the father did the idea 
of its being repaid, and he never did repay it. Finally he sets the son up in busi¬ 
ness again. There is always the financial balance on the books and the equities are 
always in favor of the father. 

Finally the son has a new opportunity offer, and the father furnishes the money and 
sets him up in business again, and he makes, maybe, on that business venture; and the 
father comes in and says, “My son, as to this particular note that you gave me for the 
purpose of this business, or this collection of notes, or the notes which you have given 
me for the last five years since you have been in the business, you now have the means, 
and you must pay them. I decree that you are to pay me that money’’; and the son 
pa '8 those. 

Then, thereafter, the son has other business dealings with the father, and the son’s 
finances perhaps are a little better, and he may make certain dei)osits in the father’s 
bank or his father’s private bank, and the son insists that he wants that monev which 
the father has intimated is in his private bank, and reallv belongs to him. Of course, 
the illustration I use is defective in this, that the son, of course, would have the legal 
right to reclaim the moneys deposited in a })rivate bank; but the purpose of my illus¬ 
tration is to emphasize that the fact that the legal claims were all on one side, the fai't 
that on one occasion thofather insisted on })ayment to him, without bringing into the 
account all these moral and equitable claims of the past, is not any reason why latei^, 
when the son wants an adjustment of affairs, the father should omit these equitable 
claims of the past. When the father insisted u])on the settlement of those claims of 
five years, and the boy had the money to pay, he could not have settled everything 
else. The father omits the equitable phase in the past—more or less equitable—and 
insists upon this legal business being paid. Then when the son later wants an adjust¬ 
ment, why, the father is not estopped from bringing up these equitable considerations 
of the past; and the fact that the District was obliged by the Federal Government to 
pay back certain moneys which were found to be due from it to the Federal Govern¬ 
ment at one time, does not estop the P’ederal Government now from bringing up 
equitable considerations when the District is trying to get a settlement of other matters, 
later. 

The Chairman. To take your very beautiful illustration of family affairs and 
carry it a little further, the son has, we will say, accumulated a little money in bank 
and his father calls on him for payment, and he says to the father, “ Father* for years 
past you have prevented me from clothing my cliildren properly and decently; you 
have prevented me from expending money on ipy wife and myself which we should 
have. Now you demand that instead of providing proper clothing for my family, 
ray wife, and children, 1 should repay this old indebtedness, assuming that there 


I'ISC AL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 261 

P''°Pf'7 '»y children.” Can you imagine such an un- 

iia^ral lather. I hope that none of us present have such. 

epijesentative Cramton. No; the father that I have in mind and the son was a 
case where the father finally came in to the son and said, “Now, you have been 
mismanaging your affairs in such a condition that I had to take them over. When 
1 took oyer your ahairs you were handling them yourself, and had been for years, 
so abominably that you owed everybody in town. You did not have any credit 
at the grocery or the clothnig store or anywhere. Your family were in want. I 
carne in and financed you in your business and provided clothing for your family 
and food for your family and got you straight in business.” 

The Chairman. That was prior to 1874? 

precisely; that was when the father took over all 
the business of the son. The son had proven that he could not keep his family 
clothed and fed, and the father took over the affairs. 

The Chairman. He might be a stepfather, but certainly not a natural father. 

Mr. CoLLADAY. It IS Stronger than that, Mr. Chairman. It is the case of a step- 
fatiiGr wlio has bcGii appoiiitGcl guardian of thGSG childroiij and has takon possGssiou 
of all thoir proporty. 

Representative Evans. There is one element that you are leaving out. It is very 
difficult to get your illustration and analogy. There never was, I think, except in 
exceptional cases, a single dollar spent that the son had not first presented a claim 
for it and wanted it. 

The Chairman. I think you would find many cases where the expenditures were 
ordered without any recommendation on the part of the District authorities; but you 
will find also, particularly during the past few’ years, requests for authority to expend, 
on the part of the District, which were vetoed by the Congress; and yet the w^eight 
of taxation was not lowered, the collections were being made just the same, and the 
Commissioner of the District presented their estimates based on w’hat they figured 
to be the ability of the District to contribute. But the (.‘ongress declined" to grant 
their requests for authority to make those expenditures. 

Representative Cramton. I will say, Mr. Chairman, that my allegory was 
impromptu. 

The Chairman. It was very beautiful. 

Representative Cramton. But I was trying to emphasize that from our point of 
view we had thought that the financial obligations were from the District to the 
Federal Government, to balance equitably, and the fact that at one time Congress 
required the District to pay certain moneys without having a full accounting of these 
other matters, does not estop us now" from insisting that all the equities be con¬ 
sidered. But as to the particular proposition before us, I think this discussion w"ill 
illustrate that there are differences of opinion as to the act, and this committee 
finally, when it makes its findings, will adopt its rule and be governed by its own 
judgment as to the equities, and it will make a report in accordance therewith. 

I want to emphasize now, in closing, that that finding of this committee is not 
law, is not an aw’ard. It is a finding that goes to Congress. It is Congress that can 
decide w’hat to do. If it accepts that finding and w^ants to turn that mone:" over 
for the building of schools or some other definite purpose, that is for the Congress 
to decide: and the Members of Congress are entitled to have before them for their 
guidance, determining how far they will follow the findings of the commission, this 
other information that the same law requires this committee to present. 

The Chairman. Now there is one other item that w"e are interested in, and that is 
the question of reopening adjustments heretofore made. I have called your attention 
to the large item w’here over $4,000,000 was charged, and the District paid that, to¬ 
gether wdth over $580,000 of interest. 

That interest rate was fixed at 2 per cent. Is it your understanding now, under 
this act, that it is the duty of this joint select committee to reopen that settlement 
and to figure additional interest, so as to adjust it on the basis of 3 per cent, under 
the language of this act? 

Representative Cramton. That provision of the act in regard to the interest is as 
follow’s: 

“And in event any money may be, or at any time has been by Congress or otherwise, 
found due, either legally or morally, from the one to the other, on account of loans, 
advancements, or improvements made, upon which interest has not been paid ”- 

The Chairman. Has not been paid. 

RepresentatWe Cramton (continuingreading): 

“by either to the other, then such sums as have been or may be found due from one 
to the other, shall be considered as bearing interest at the rate of 3 per cent per an¬ 
num from the time when the principal should, either legally or morally, have been 
paid, until actually paid.” 



262 FISCAL RELATIONS BETWEEN U. S. AND DTSTRIC^T OF (COLUMBIA. 


I would not want to p;ive yon anything further than that language, because 1 have 
not gone into that question or given it great consideration, and I know the committee' 
have. 

The OuAiKMAN. There was another charge made against the District, based on the* 
report and on recommendation of the committee which submitted the amount, figured 
the interest, which, I believe, was at the 2 per cent rate, but that is immaterial—at all 
events, ap})arently Congress in acting upon the recommendations charged the District 
with the principal sum. The District paid that sum without interest. Tn the act 
making the charge, the language reads that a certain amount shall be paid in full, 
but it made no reference to interest. Now, is that a case where, in your opinion, the 
joint committee should take action, reopen it, and report that it was paid under the 
the act stated as in full, but that interest on it at 3 per cent should be ligured and 
charged ? 

Representative Cramton. I prefer now not to commit myself as to particular items 
that have evidently been up before this committee at considerable length. T will 
only say that the provisions of the act must be followed by the committee, and where 
the act requires that interest must be figured, the interest must be figured; and where 
the act does not require it you are not required to figure interest; and where it a])pears 
that interest has not been ligured, it shall be figured; that if it has l'»een paid, it is not 
to be figured. 

There is only one thing further T want to call your attention to as fortifying my 
construction of the language as to the first phase of your work. I read from the act: 

“Neither the cost of constriiction nor maintenance of any building erected or owned 
by the b'nited States for the purpose of transacting therein the Inisiness of the Govern¬ 
ment of the United States shall be considered by said committee.” 

That language emphasizes the broad scope of the prior language in this; that it was 
felt that the prior language was so broad that if this limitation was not included there 
might be a thought that a building put up here such as the Capitol—although that 
was a prior date—that beautified the city and was purely a Federal agency, might b.e 
referred to: so we put in the limitation that no building, even though it might supply 
comforts or necessities, or beautify the city, if it is used primarily for the purposes of 
transacting the business of the Government, is to be considered. 

Senator Ball. You would take the Lincoln Memorial, then, as one of the buildings 
licautifying the city that the District should pay a part for? 

Representative Cramtox. No. I think perhaps you were out. Senator, when I 
spoke of this. I used that as an illustration of this fact, that the committee is required 
by this act to report expenditures that l>eautify the city, expenditures which the 
committee does not take into account in striking the balance, one of them the Lincoln 
Memorial, which beautifies the city. That expenditure should be reported, but in 
my judgment, and I think we will all agree, it should not be charged in any part to 
to the District, because it is the desire of the Nation to honor Lincoln, and the beauti¬ 
fying of the District was the lesser purpose. 

Senator Ball. T should think it should go in the same category, really, as a monu¬ 
ment erected on any other Government property. 

Representative Crastton. Any of them that are here in the District. 

Senator Ball. They beautify the property upon which they are built. 

Representative Cramton. Any of them that are in the district and that beautify. 

1 think, Mr. Chairman, that is all. Thank you very much. 

The Chairman. Just one word. \\Y understand, or at least I understand, from your 
statement made here, that it was the desire of the House, represented by its conferees 
or the conference managers of the House, to settle and determine the status of the 
District affairs with the Federal Government, so as to set at rest contentions that spring 
up from time to time, and in your personal opinion it was a possibility for joint select 
committee to make the necessary inquiries and submit a comprehensive report of its 
findings to the conference, within a period of about seven months’ time. 

Representative Cramton. The provision originated in the Senate, and as it came 
to the House was urged upon the House conferees by the Senate. It provided, as 
I recall, for this same investigation of the financial expenditures with reference to 
surplus from 1878 down, if I remember correctly, and provided for a report to Congress 
either the 1st of December or the 1st of January. 

The amendments that were suggested by the House and accepted by the Senate 
added only this report of expenditures that I have been emphasizing, and which in 
my judgment—I may be wrong—is not as difficult or as complicated for the committee 
or its accountants as the other part, because it is just reporting a list of expenditures 
and its purposes. That was the first thing that broadened the work of the committee 
there. 


1 IS(’AL RELATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


263 


^ Then we broadened it by taking the date back from 1878 to 1874. Where the 
Senate comrnittee proposed a review of 44 years, the House suggested making that 
48 ^ears, an increase of only a little over 10 per cent in the period of time. 

1 hen we expanded the time for the committee to report to as late a date as seemed 
feasible and still have it come into conference at this session. We made it the 1st 
of February, one month later. 

The Chairman. And you added the interest provision? 

Representative Cramton. That had slipped my mind for the moment. That was 
Mr. Johnson’s language, then, and I had never given much consideration to it. 

Now, whether this thing could be accomplished in the time that the Senate pro¬ 
posed, or in the time that we proposed with our addition, of course was not thought 
out so greatly. The Senate had made a suggestion that certain work should be done 
by—was it the 1st of December or the 1st of January? 

The Chairman. The 1st of January, I believe. 

Representative Cramton. .And if it could be done by the 1st of January, the extra 
month then was what we added to it. And, in any event—I do not want to take so 
much of the time of the committee—1 want to emphasize this. This language had a 
number of provisions that were intended to give a new start on our relations with the 
District. There was the change from 50-50 to 60-40; there was the doing away with 
the limit on estimates that had prevailed before; and there is language that prevents 
any more questions coming up hereafter as to accumulated surplus,'because what is 
left over from one year is available the next year, and so forth. 

Then we were to clean the slate, to have a committee work out this past and get 
some conclusions. 

To accomplish that in a form that (’ongress will make effective, it ought to be done, 
as I am sure the committee is trying to do it, very thoroughly and completely, 

If that is all, Mr. Chairman, 1 thank you very much. 

The Chairman. That is all. We are very much obliged to you. 

Mr. Cramton. It is very kind of you to give me the opportunity to come in. 


Statement of Mr. Edward Colladay (Resi’med). 


Mr. Colladay. There are just two or three more thoughts that 1 would like to add 
to my statement, and it will take a very few moments. 

The Chairman. Yes, Mr. Colladay. 

Mr. Colladay. First, the District of (’olumbia is on both sides of the account; that 
is, the District taxpayers are also national taxpayers. 

In the illustration given by (Congressman (.'ramton, the son or stepson, along with the 
other children in the family, 52 in number, pay the cost of living of the father, and 
the District of Columbia pays in fact more than any other 1 of 17 States on that side 

of the ledger. . , , ,, i 

On the matter of beautification of the streets and parks, including them all, tliey 
were all contributed by the people of the District of Columbia. All that property is 
held in trust, and therefore when it is appropriated and applied to us it wdl have to be 
figured in if true equity is to be done. Its value would have to be figured in along with 
the value of the masonry purchased and laid with the appropriations made by Congress, 
and it is not at all improbalde that the value of that land would amount to the propor¬ 
tionate part, if there were a balance to be struck between the Federal Government 
and the District of (Columbia, in the matter of creating memorials. I do not know 
whether that thought would be carried to such an extent, for instance, as to include 
the statue of Washington in Washington Circle or the statue of General Thomas in 
Thomas Circle or not, but there are rather large values involved in those parks. 

I think it has been made clear, and if not it should be made a part of the record, 
that in connection with the Union Station the District paid half of the fund of 84,000,- 
000 in addition to contributing the amounts which were held in trust in the form ot 
the’streets which constitute a large part of the land on which the causeways were 

do not think of anything else that should be touched, do you, Mr. Tweedale? 


Mr. Tweedale. No. . ^ ^ i nf n j 

The Chairman. Do any of the members of the committee want to ask Mr. (.olladay 

^ Representative Evans. I would like to ask him one question as to one statement 
he made, which has been decided by the Supreme (Court of the United States, when 
the question was directly before ii, that the streets, and I think the parks—I am not 
sure as to those-were held by the United States and 

and in another that it held them in trust, not for the people ot the District but for the 
public. 


264 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Mr. COLLA.DA.Y. I liav 3 not in mind the particular decision, but I know that in 
hearin :;3 held in which Congressman Johnson participated, he used this language, on 
page 134S of the hearings before the subcommittee of the House Committee on Appro¬ 
priations considering the District of Columbia appropriation bill for the fiscal year 1923: 

“The Supreme Court of the United States has decided that the streets are merely 
held in trust for the use of the public. ” 

But the fact remains that if pure equity is to be dealt with, those streets and the 
parks and the Mall were all contributed by the original people of the District of 
Columbia. 

Representative Johntson of Kentucky. For a consideration. 

Mr. C0LLA.DA.Y. I stated the consideration that the Congressman has in mind was 
the establishment of the Federal Capital here. 

Representative JoHMso>^ of Kentucky. Yes. 

Mr. CoLLA.D\Y. No other consideration. 

Representative Joh'json’ of Kentucky. That was a very seductive one. 

Mr. C 0 LLA.DAY. No doubt. I do not think it would be seductive to live and own 
prop ertyin the Distdctof Celumbiaif the taxpayers were to be charged for the erection 
of all th e memorials and oth er structures of that kind. 

The Chairman. Is there anything else? 

Mr. 0)LLAOA7. No; thank you, Mr. Chairman; I have finished. 

The Churman. It is no v after 12 o’clock. Mr. Hodgson is present. Possibly we 
could hear Mr. Hodgson before luncheon. I do not know of any other witnesses that 
have requested to be heard. 

Statement of Mr. Thomas Hodgson. 

Mr. Hodgson. Mr. Chairman and gentlemen of the committee, I have got a report 
that I submitted to you, and if you want any testimony on that report I would be 
glad to give it to you; but as long as one of the main objects of this committee is to 
ascertain a definite sum of money I would like to give my views about that. 

Now, I am going to avoid, as far as possible, technical accounting or bookkeeping 
terms. As a matter of fact, it is cash, and any particular accountant in reference to 
that cash can tell you what the surplus is, and my proposition, which I wish to sub¬ 
mit, is this, that there are certain receipts that are collected and deposited in the 
Treasury, and that there are expenditures made from those receipts. Now, if they 
have ascertained what is the difference between the receipts and the expenditures, 
that is the cash that is in the Treasury, and in reply to this question that the com¬ 
mittee has before it I will say that that difference is legally and properly in the 
Treasury. 

If the citizens of the District have paid up their taxes, then from that side of the 
account it is morally there, and if, on the other hand, faulty legislation causes charges 
not to be made against it was corrected, then I say that the balance up there is legally, 
properly, and morally to the credit of the District of Columbia. That is on broad 
grounds; that if you correct the errors of taxation, if you examine them, there is no 
such thing as errors of taxes. The citizens have complied with the moral duty im¬ 
posed upon them by law, and if on the other hand, faulty legislation has been enacted 
whereby the receipts have not been charged, and that is corrected, then the balance 
that remains after those transactions, you have got up there a sum of money due the 
District of Columbia; morally, properly, and legally due them. That is all I have 
got to say about that; but if you want to take up my report I will be glad to go through 
it with you. 

The Chairman. I believe that each member of the committee has been furnished 
with a copy of your report, and before taking that up, however, I want to ask you, in 
view of your familiarity with the accounts and the various examinations—I do not 
call them audits, though they may or may not be properly so termed—what, in your 
opinion, would be accomplished if competent auditors were directed to go over the 
records from July 1, 1874, again, up to July 1, 1911, comparing all items of expendi¬ 
ture with the items in the annual appropriation bills authorizing those expenditures? 

Mr. Hodgson. I do not think it Avould accomplish a thing. I do not think it 
would be worth the paper it was written on. 

The Chairman. Why do you make that statement? 

Mr. Hodgson. Because I have endeavored to go from 1878 back to 1874 to verify 
facts and absolutely can not get at the records. They are absolutely impossible, anS 
those that are there are incorrect. 

The Chairman. So that it would be wasting time to make an examination of the 
accounts between 1874 and 1878? 

Mr. Hodgson. Yes, sir. 


FISCAL RELATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


265 


exImin'eS and veriS? ™ "P "ave they been 

Mr Hodgson. Yes; they have been examined and verified I stated those ar- 
VP**?'* accounts for the fiscal year 1879 down to 1921 

1 he C h.virman. In what capacity? lo ±541. 

of^the ‘“Charge of District of Columbia accounts in the office 

Rtat^anrOthrnZ^iT *6 work to the Auditor for the 

Office bn t® t*!® Clenci-al Accounting 

Umce, but always had the District accounts in charge 

m consider that those statements of accounts annually, as 

made by >ou, amounted to a thorough and complete audit of the books and records? 

Sens>saudTt wasatolutei?\Lro^^^^ 

froni^ 1^8 up^tolon^^ ^ trying to confine this argument or discussion to the period 
Mr. Hodgson. Yes. 

^ understand that the District authorities had their records, and 
that they were gone over by the representative of the Comptroller General’s office, 

j ourselt, and further by Mayes, and possibly also, to a certain extent, bv Spalding- 
is that correct? ’ ^ & 

Mr. Hodgson. Yes, sir. 

The Chairman. So that a reexamination by an independent set of officers would be 
merely a review of work that has been done at least a second time? 

Mr. Hodgson. I do not think it would be worth anj^hing at ail. I have alwavs 
tried to take hold of anything there wrong in connection with my work, and every 
Item that Mr. Mayes and even Haskins & Sells and Mr. Spalding had has been veri¬ 
fied and proven time and time again, and 1 do not believe that there is but one item 
out to-day that has not been called to the attention of Congress. I do not believe 
there is but one, and I know what that is. 

Senator Harris. What is it? 

Mr. Hodgson. That is about $6,000. That is where the District of Columbia sold 
.a schoolhouse that the United States had participated in the purchase of and the Dis¬ 
trict got the money. 

Representative Hardy of Colorado. There is about $3,000 involved, then? 

Mr. Hodgson. $6,000 involved. 


Representative Hardy of Colorado. But the Government has only one-half of it, 
$3,000? 

Mr. Hodgson. Yes. 

The Chairman. In view of your report, Mr. Hodgson, you criticized the act of 1878; 
but that is the statute. 

Mr, Hodgson. Yes, sir. 

The Chairman. You are of the opinion that the District Government should have 
paid for all street improvements and the maintenance of those thoroughfares, as I 
take it from the reading of your report. 

Mr, Hodgson, No, I think not. Senator, here is the main theme in my report. 
There are other things in there, but the main one is this: Washington City had 6,111 
acres of land. Here is the county that had 37,800.8 acres. Then by reason of legisla¬ 
tion that forbids the appropriation for that county, time after time, that Congress did 
not intend to develop the county at the expense of the city, nevertheless it has been 
done. That is the main theme in my report to you. 

Senator Harris. Do you mean that they spent more money relatively on the Dis¬ 
trict outside of the city than they did in the city, or just the opposite? 

Mr. Hodgson. I mean this. Senator: Here is this county in the northwest that has 
been built since about 1890, and the local city, ivhich I claim is the National Capital, 
the Federal City, has been neglected in'the upbuilding of the National Capital. In 
other words, the money has been devoted to that; and I claim that it was a speculative 
scheme, entirely, to develop the northwest section, in the county; not Washington 
City, but the county, at the expense of the city, which is the Capital. There are a 
great many other items in there, but that was the main one that I desired to develop. 

Senator Harris. I have not had time to read your report. What do you say with 
regard to the report of Haskins & Sells? 

Mr. Hodgson. From the accounting standpoint it is very fine; and they have not 
reported anything that I have not reported in there that I think would be subject to 
legislation. 

Representative Johnson of Kentucky. May I ask when the county of Washington 
was legislated out of existence and merged into the one municipality of the District of 
Columbia? 


32894—S. Doc. 301, 67-4 


18 



266 FISCAL RELATIONS BETWEEN U. S. AND DlSTRKrT OF (’OLUMBTA, 


Mr. Hodgson. About 1871. 

Representative Johnson of Kentucky. By the act of February 21, 1871, was it not? 

Mr. Hodgson. Yes. 

Representative Johnson of Kentucky. That is all. 

The Chairman. Your report appears to be very complete on the questions of the 
old bonds. I think we have full data on that. 

Your report deals very extensively with the question of extending the streets and 
alleys. 

Mr. Hodgson. Yes, sir; that is the development of the northwest. 

The Chairman. Now you have included in the balances set up in the statement of 
account of June 30, 1922, two items, one marked $311,532.99; trust fund. District of 
Columbia? 

Mr. Hodgson. Yes. sir. 

The Chairman. They are in the custody of the Treasury? 

Mr. Hodgson. Of the Treasury of the United States. 

The Chairman. Is that one particular trust, or is it quite a number of trusts? 

Mr. Hodgson. It is about eight, I think. 

The Chairman. And in your judgment is that an item that this committee should 
inquire into at all? 

Mr. Hodgson. No, I think it is a thing that belongs to itself, and can take care of 
itself. They are all trust funds, created by Congress in various laws. 

The Chairman. Yes. There is another fund of $250,224.55; special fund. District 
of Columbia. Yliat is that? 

Mr. Hodgson. That is the water department, the Washington Aqueduct, and 
things like that. They are defined by the Comptroller of the Treasury in the law. The 
comptroller defines the title of those things. 

The Chairman. They are kept separate and apart, but are comprised in the general 
fund? 

Mr. Hodgson. No; they do not come in the general fund. 

The Chairman. They are separate from the general fund, then? 

Mr. Hodgson. Yes, sir. 

The Chairman. I see the general fund is shown here as a separate figure. You gave 
an expression in your report as to the proportional assessments or contributions and 
appropriations? 

Mr. Hodgson. Yes, sir. 

The Chairman. Is it your view that it would be wiser if the (Yngress were to fix 
a basis for definite tax levies on full valuation of the property, and then to have that 
money paid into the general fund and then appropriate as it might be proper for the 
entire needs of the District, and pay out of the Federal Treasury the difference 
between what was received by way of taxation and for privileges and licenses, and the 
amount of the total expenses? 

Mr. Hodgson. My expression there, Senator, means this, that if you abolish the 
proportionate appropriations, which I claim are absolutely unconstitutional, and that 
if Congress desires to give the District some money, $1,000,000 or $20,000,000 a year, 
they have a right to do so. To the extent of their contribution, however, do not deposit 
that money in the Treasury but deposit it with the Treasurer of the United States 
to the same fund that the District puts other taxes. If the ('ongress will decide to 
give the District $1,000,000 or $20,000,000, all right; but the proportionate appropria¬ 
tion is going to cost vou terribly as long as it exists. That is the same trouble you 
have to contend with now. It makes it bad from every standpoint, bad from an 
accounting standpoint; and then I claim that it really amounts to a tax on the United 
States Government when you say definitely that a definite percentage shall be paid 
by the United States. 

Representative Hardy of Colorado. You think it would be a good idea for the 
(Congress to arrive at some equitable figure like $8,000,000, and say, “We will con¬ 
tribute $8,000,000 to the District of Columbia,” and let the District of Columbia 
spend what tliey think is best, within the judgment of the Congress, for the develop¬ 
ment, and tax themselves to raise the balance? 

Mr. Hodgson. I would not say that. I would say let the District run the whole 
machinery. Whatever you give, I would turn it over to the District and put it into 
their taxes; and then I would make them report to an appropriations committee 
of Congress, showing what they had done; and if the money was not properly dis¬ 
bursed in accordance with the mind of that committee, they could reduce the amount 
they would give them for the next year. 

The Chairman. Would you not think it was rather better to give the Congress 
an opportunity to pass on their recommendations, instead of leaving full authority 
in the hands of the District representatives? 


FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 267 


Mr. Hodgson. I would try them the first year, Senator. 
Kepresentative Hardy of (Colorado. You tried that did 
seventies? ’ 


you not, way back in the 


Mr. Hodgson. You have got those troubles out of the way. 1 would hold them to 
a strict accountability the first year, of how that money was given them, with their 
they would take over all the responsibility from these committees of 
Congress. If you did not think they spent it right, call them down, and say ‘‘We 
ivill not give you our money. ’ j ^ 

The Chairman. I have no further questions to ask Mr. Hodgson. \re there anv 
questions by other members of the committee? ' ^ 

Representative Evans. Mr. Hodgson, is there, among the items you have looked 
over, one of about $270,000, or $280,000, which was at one time, or at its inception 
made a hen against 25 per cent of the taxes levied? ' 

Mr. Hodgson. Yes. 

Representative Evans. What was that? Just explain that to the committee. 

Mr. Hodgson. Well, there was an old debt known as the Bowen’s bonds, and Con- 
gress authorized the taking up of that debt by 5 per cent bonds, in which it said 
that the United States would not be responsible for the interest or principal or anv 
part thereof. 


The Chairman. That is included in your report, and the figures are $281 500 It 
was a part of the $1,200,000 authorized issue of 5 per cent bonds. 

-Mr. Hodgson. Yes, sir. 

The Chairman. You explained that at length in your report? 

Mr. Donovan. That was also brought out in the accountants’ rejiort. 

^ Representative Evans. Those bonds or that debt was paid 50-50 by the Federal 
Government and the city government? 

Mr. Hodgson. Yes, sir. 

Representative Evans. Can you give about the date of that, or do vou give it in 
your report? 

Mr. Hodgson. I claim this, that the Treasurer of the United States- 

Representative Ev.vns. .Inst one moment. Do you give the date of that in your 
report? 

Mr. Hodgson. Yes, sir. 

Representative Evans. That is all. 

Mr, Hodgson. 1 claim also that the Treasurer of the United States was responsible 
for the United States paying 50 per cent of that debt by reason of incorporating the 
money into the estimates for appropriations, which appropriations were payable 50-50; 
and he just absolutely annulled the law governing the debt. 

Representative Evans. That is all. 

The Chairman. Is there anything further that any member of the committee has 
to offer? 

Mr. Hodgson. There is just one thing more, Mr. C'hairman, and I think that would 
be enough. 

There are some of those transactions that 1 show in that report, and the effect that 
it has had upon the money, and which I told you in the start here, if legislation was 
used to correct, that then you would have your moral and proper and legal cash bal¬ 
ance due the District of Columbia. For instance, take that Washington Market Co. 
debt, if you will just turn to it. Senator, in my statement. It is in one of these items. 

The Chairman, It is in your report. There was legislation in regard to that, and 
the amount was charged to the District, $106,000. 

Mr. Hodgson. No; not that. Senator. It is under the lease, under the 99-year 
lease there, I just want to show you the effect that 1 do not believe the legislators 
ever intended. It was the beginning and termination of the Washington Market Co. 
lease there. I give the amount of moneys by the years. 

The Chairman. Yes; I have that statement here. It reads as follows; 

“ The Washington Market Co, had a lease for 99 years at the annual rental of $25,000, 
which was reduced to $20,000. The rent was further reduced to $7,500. 

“These rentals were devoted to the purpose of relieving the poor of the District 
of Columbia. The amount of these rentals received from 1871 to 1879, inclusive, 
amounted to $80,361.38, which sum was used for relieving the suffering poor of the 
District of Columbia. 

“ In addition to this sum there has been appropriated by congressional acts for the 
relief of the poor the following sums: 1870, $30,000; 1871, $12,000; 1875, $10,000; 
1877, $20,000; making a total of $152,361.38. 

“ From January 1, 1879, to March 3, 1921, a period of 42 years and 3 months, there 
has been collected the sum of $316,875. 

“There has been deducted from the District revenues the sum of $158,437.50, as 


per report of William W. Spalding, House Resolution 263 of the Sixty-third (’ongress.’’ 


f 


268 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


So that voii are referring in your remarks now to tlie prior years whieli Were not 
embraced in the Spalding report and settlement? 

Mr. Hodgson. As I said, this is in connection with the tax of a square of ground 
that belonged to the United States. The franchise rental was one thing that had 
been settled; but in connection with that franchise rental there was this proposition 
raised, that it is going to be $20,000—reduced from $25,000 to $20,000; and that by 
reason of authority to tax it, the ground which belonged to the United States/they 
reduced that franchise rental to $7,500 a year; and in connection with the reduction 
it said, “if your tax amounts to more than a certain sum, it must reduce that rdntAl.” 

Now, I am just trying to connect that rental with the tax that was authorized to 
be made bn a piece of land that the United States Government owned. I give them 
all the monevs that were for the purposes of relieving the poor from 1870 down to 
1879; and this gentleman who spoke here this morning spoke about the absolute 
severance of the United States affairs from those of the District of Columbia by the 
act of June, 1878. He stated that right here. If that did, then this money that they 
were to get in the shape of taxation goes right back to the United States Government. 
But, conceding that it has gone in there and it is there, and you have this fact staring 
you in the face, that when they deposited that money into the general fund you had 
to match it, and thereby taking LTnited States property and getting a rent for it, and 
then depositing that rent to the general fund, you taxed the United States an equal 
amount with it. 

Now, those are the accounting propositions in connection with that, and these 
questions of items are the ones that I say that if the committee will have enac'ted into 
legislation that will correct the inequities in appropriations, it will leave the moral, 
legal, and proper balance up there in the Treasury. 

This amounted to $628,927 that the United States had to pay. That was their own 
money. In other words, if they wanted to build a schoolhouse there was $628,927, 
and out of that money the United States paid for the schoolhouse. And it is those 
things that have made it so burdensome for me all of these years in the Treasury; 
inconsistency in legislation, say one thing one day and the next day say something 
else. 

Just while I happen to think of it. on the question of beautification of the Capital, 
that has only been up here since 1916. That was when the question was first brought 
up. Of course 1 have never taken any consideration as to the items of beautifying 
the Capital. 1 only just simply call your attention to what I believe is the thqiight 
that Congress, acted upon, that they did not intend to develop the northwest section 
which lies in the 37,000 acres of land, at the expense of that part lying in the 6,111 
acres. You see magnificent houses there, you pee the Connecticut Avenue Bridge 
and all those magnificent structures up there in the northwest, and you come down 
here and you see people living in holes, right in the shadow of the Capitol. 

The Chairman. Mr. Donovan, did you want to ask a question? , 

Mr. Donovan. I merely wanted to call attention to the fact that by the terms of the 
deficiency act approved March 4, 1915, a complete settlement between the United 
States and the District in connection with the Washington Market Co. was made by 
Congress requiring the District to pay to the United States $158,437.50. 

Now regarding the other matters spoken of by Mr, Hod|^on in connection with the 
adjustment of rents, and taxes, and so on, the entire Washington Market Co. case 
went through the courts and to the Supreme Court of the United States. 

Mr. Hodgson. Well, we have considered equities, Mr. Donovan. That piece of 
ground belonged to the United States Government, and they paid for it. 

Mr. Donovan. The improvements, but not the ground. 

Mr. Hodgson. And the District government, by reason of faulty legislation, went 
to work and got the taxing levies, I think I have got them here, and that money de¬ 
rived from the United States, the District not having one cent in it; and then here is 
where the trouble began, by reason of depositing that to the general fund of the Dis¬ 
trict of Columbia, the United States Government sets up a claim against it. 

The Chairman. I believe the committee has full information regarding that market 
company matter. 

Mr. Hodgson. These little items are the ones that 1 think will impress what 1 
tried to emphasize, by saying that the money is morally and properly and legally due 
the District of Columbia. 

The Chairman. You do not know of any other items than these that have been 
brought up in the Haskins & Sells report? 

Mr. Hodgson. And my report. There is not an item in the last 40 years—-every 
item that you have seen has been at my instigation. 

The Chairman. Will you give us a reference to the $6,000 school item, please? 

Mr. Hodgson. Mr. Spalding investigated that $6,000. I pointed it out to him. 


FISCAL RELATIONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


269 


tlata where he made his investigation? 

Ml. Hodgson \ou have told him to make his report. I pointed out to him that 
'PIiTchairwa the Treasury probably under a misnomer, 

or the com.nittoe '* *« pleas,.re 

,„oJ: thr,f ?'s«e'cH.i myt't'ter to'X.' 

The Chairman. We will put it in the record 

offhe VCrirt nf J 'vould like to have the record show the stirphis revenues 

riu Oh Columbia beginning trom 1879 dowm to date. 

1 he Chairman, lhat we wmiild like to have. 

(The matters submitted by Mr. Donovan are here printed in the record, as folloivs:) 


Statement shoiring reimbursemenLs made to the ihiited States from the 

District of Columbia between 1910 and 1920. 


revenues of the 


For moneys advanced by the United States to the District of Columbia 

^ tor extraordinary imjirovenients between 1902 and 1910. 

hor interest at 2 per cent on above advances. 

(Note.— The above indebtedness, both principal and interest 
liquidated in full between 1910 and 1916.) 

Reimbursement under section 8 of District of Columbia act for 1920 
(reimbursed in 1920). 

“That the sum of $75,000 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District, of Columbia to the United States on account of the 
unpaid balance of the advances to defray District of Columbia ex¬ 
penses of the fiscal year 1878, as provided by section 17 of the act 
providing for the support of the District of Columbia for said fiscal 
year, approved March 3,1877; and said sum shall be transferred to the 
credit of the United States from the amount in the Treasury to the 
credit of the District of Columbia immediately upon the approval 
of this act.” (District of Columbia apjiropriation act for 1920, ai)- 
proved July 11, 1919, sec. 8.) 

Reimbursement under section 9 of the Disti ict of Columbia act for 1920 

(reimbursed in 1920). 

“That the sum of $75,000 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District of ('olumbia to the United States on account of ad¬ 
vances for the support of the public schools of the District of ('o- 
lumbia, as provided by a clause of the sundry civil appropriation 
act approved March 3, *1877; and said sum shall be transferred to the 
credit of the United States from the amount in the Treasury to the 
credit of the District of Columbia immediately upon the approval of 
this act.” (District of (hlumbia appropriation act for 1920, apjiroved 
July 11, 1919, sec. 9.) 

Reimbursement under section 10 of the District of ('olumbia act for 

1920 (reimbursed in 1920).,. 

“That the sum of $50,865 shall be transferred to the credit of the 
United States from the amount in the Treasury of the United States 
to the credit of the District of Columbia to pay the indebtedness of 
the District of ('olumbia to the United States on account of advances 
to defray the expenses of constructing and equipping a school biiild- 
* ing in Georgetown, District of ('olumbia, as provided in the act ap¬ 
proved March 3, 1875; and said sum shall be transferred to the 
credit of the United States from the amount in the Treasury to the 
credit of the District of Columbia immediately upon the approval of 
this act.” (District of ('olumbia appropriation act for 1920, ap¬ 
proved July 11, 1919, sec. 10.) 

Reimbursement for interest on 3.65 District of (('olumbia bonds for 

1877 and 1878 (reimbursed in 1915).(... 

“The Secretary of the Treasury, through the accounting officers of 
the Treasury, is authorized and directed to charge to the District of 
('olumbia the sum of $586,067.23, as a debt due the United States 
from the District of ('olumbia on account of money advanced by the 
United States to the District of (.'olumbia wdth wffiich to pay the 


$4, 144, 696. 35 
586, 802. 83 


75, 000. 00 


75, 000. 00 


50, 865. 00 


586, 067. 23 








270 FISC’AL RELATrONS BETWEEN V. S. AND DISTKU’T OF COLUMBIA. 


interest on the 3.65 bonds of the District of Columbia for the fiscal 
years of 1877 and 1878; and, in stating the account between the 
United States and the District of Columbia, the accounting officers 
of the District of Columlna shall charge the District of Columbia with 
said sum; and the said sum of $586,067.23 must be paid to the 
United States bv the District of Columbia on or l)efore June 30, 1915. 
out of the revenues of the District of Columbia derived from privileges 
and from taxation upon the taxable property in the District of 
Columbia.” (Deficiency act approved Mar. 4, 1915.) 

Reimbursement account of Washington Market Co., rentals 1878 to 

1914 (reimbursed in 1915). 

‘‘Washington Market Co. rentals: For amount due the United 
States from the District of Columbia for collections made on account 
of the franchise rental of the Washington Market Co., fiscal years 
1879 to 1914, inclusive, there shall be transferred from the revenues 
of the District of Columbia to the United States the sum of $158,437.50, 
such sum being in full settlement of the amount due the United States 
for said market rentals under the decision of the Comptroller of the 
Treasury, December 2, 1914, and to be covered into the Treasury 
as miscellaneous receipts.” (Deficiency act approved Mar. 4, 1915. ) 

Reimbursement of Freedmen’s Hospital, 1906 to 1913 (reimbursed in 

1915)... 

“To reimburse the United States the amount due on account of 
one-half of the per capita cost of maintenance of indigent patients in 
Freedmen’s Hospital from the District of Columbia in excess of the 
number charged to and paid for by said District during the fiscal 
years 1906 to 1913, inclusive, there shall be transferred from the 
revenues of the District of Columbia to the United States, beginning 
with the fiscal year 1915, the sum of $37,996.70, which amounts so 
transferred shall be covered into the Treasury as miscellaneous 
receipts. (Sundry civil act Aug. 1, 1914.) 

Reimbursement account of support of insane in St. Elizabeths Hospital, 

1881 to 1911 (reimbursed in 1913 and 1914). 

“The reimbursement required to be made to the United 
States by the District of Columbia under the provisions of the 
sundry civil appropriation act approved August 24, 1912, on ac¬ 
count of deficiencies in payments for the care and maintenance of 
the insane of said District during the fiscal years 1881 to 1911, in¬ 
clusive, is hereby fixed at $719,536.09.” (District of Columbia 
appropriation act for the fiscal year 1914, approved Mar. 4, 1913.) 

Reimbursement account of support of insane in St. Elizabeths Hospital 

(reimbursed in 1917)... 

“To further reimburse the United States, and in full, the amount 
due on account of one-half of the per capita cost of maintenance of 
indigent patients in the Government Hospital for the Insane from 
the District of Columbia in excess of the number charged to and 
paid for by said District during the fiscal years 1879 to 1912, inclusWe, 
there shall be transferred from the revenues of the District of Colum¬ 
bia to the United States the sum of $282,754.26.” (Sundry civil 
act, approved July 1, 1916.) 

Reimbursement on account of fines in United States cases in criminal 
division of Supreme Court, District of Columbia, between July I, 

1878, and June 30,1908 (reimbursed in 1917). 

“Court fines: The sum of $24,300.76, representing fines in United 
States cases collected on judgments of the criminal division of the 
Supreme Court of the District of Columbia during the period from 
July ], 1878, to September 30, 1908, inclusive, and deposited in the 
Treasury of the United States to the credit of the District of Colum¬ 
bia, shall be transferred from the credit of the District of Columbia 
to the United States.” (Deficiency act, approved Apr. 17, 1917.) 

Reimbursement on account of fines in United States branch of police 
department between July 1, 1878, and January 1,1902 (reimbursed in 

1917).... 

“The sum of $211,450.12, representing fines in United States cases 
collected on judgments of the police court of the District of Columbia 
during the period from July 1,1878, to January T, 1902, inclusiye, and 
deposited in the Treasury of the United States to the credit of the 


$158, 437. 50 


37,996 70 


719,536. 07 


282, 754. 26 


24, 300. 76 


211,450. 12 








FISCAL RFI.ATrONS BETWEEN U. 


S. AND DISTRICT OF COLUMBIA. 


271 


District of Columbia, shall be transferred from the credit of the 

Reimbursement imder sec. 7 of District of Columbia act for 1919 on 
Sed \n mgf equipment of the District Jail (reim- 

of $125, 000 shall be transferred to the crediVof the 

to the^c?edirof7hi states 

tL TlWrtot nf c ^ of Columbia to pay the indebtedness of 

the District of Columbia to the United States on account of the 

construction and equipment of the District Jail, as provided in sec- 

ninety-seven of the Revised Statutes of the 
District of Columbia. ” ^District of Columbia appropriation act for 
the fiscal year 1919, approved Aug. 31, 1918.) 

Reimbursement under sec. 8 of District of Columbia act for 1919 
of advances to pay teachers in the District public schools 
in 1874 (reimbursed in 1919). 


That the sum of .$97,740.50 shall be transferred to the credit of 
the United States from the amount in the Treasury of the United 
States to the credit of the District of Columbia to pay the indebted¬ 
ness of the District of (toliimbia to the United States on account of 
advances to pay teachers in the District public schools, as provided 
e the act entitled ‘An act making appropriation for the payment 
of teachers in the public schools of the District of Columbia, and 
providing for the levy of a tax to reimburse the same, ’ approved 
April 18, 1874.” (District of Columbia appropriation act for fiscal 
year 1919, approved Aug. 31, 1918.) 

Reimbursement account of Maryland School for Blind, 1899 to 1906 
(with interest at 2 per cent, $1,184.81; reimbursed in 1907; interest 

paid United States in 1907). 

Reimbursement account of Meridian EUIl Park and Montrose Park 
(principal and interest at 3 per cent, $12,952.15; reimbursed in 1912, 
1913, 1914, and 1915, in four equal annual installments). 


$125, 000. 00 


97, 740. 50 


52, 973. 64 
317, 825. 98 


Total 


7, 546, 346. 94 


M KMORA NDUM SHOWING APPARENT EQUITIES IN FAVOR OF THE DISTRICT OF COLUMBIA 
NOT INCLUDED IN REPORT OF HASKINS A SELLS, ACCOUNTANTS . 

1. Appropriations paid wholly from the revenues of the District of Columbia, Jiilv 
1, 1878, to June 30, 1922, .$4,198,608.39. 

2. Expenditures on account of the policemen and firemen’s relief funds, $3,065,« 
672.85. 

*3. Water consumed by Federal departments for which no payment is made by the 
United States Government. 

4. ((ost of construction of the water system to June 30, 1922, totaling $32,312,346.74, 
of which only $8,830,028.38 has been derived from the revenues of the United States. 

5. Fees, fines, forfeitures, etc., collected in the Supreme Court of the District of 
Columbia, all of which is paid wholly into the revenues of the United States. District 
paid one-half of cost of reconstructing building, about $900,000, and is now paying 60 
per centum of appropriations for salaries and expenses (for 1923 amounted to $2()4,657). 

6. Award of .$4;l,120, the amount offered to and accepted by the commissioners for the 
Arthur School property more than seven years ago, this property being included 
within the taking lines for the extension of the Capitol Grounds. Building is still be¬ 
ing used for school purposes. 

7. On account of yiayments totaling approximately $1,268,340, to officers and mem¬ 
bers of the Metropolitan police force stationed at the White House between 1874 and 
1922. Congress a short while ago passed a law providing fully for a White House 
force supported wholly hy the iJnited States Government. 

8. National Training School for Boys, District of Columbia paid one-half for land and 
improvements for National Training School for Boys, all of which have been turned 
over to the jurisdiction of the Department of Justice and the school is now a Federal 
institution. District j^ays for boys committed to school from courts in the District of 
(Columbia. District has never received credit for its part of the investment. 

9. War fraud cases now being tried in the Supreme Court of the District of Columbia 
uniler apjiropriations payable 60 per cent from the revenues of the District of Columbia. 

10. Postal fraud cases tried some years ago in the Supreme Court of the District of 
Columbia under approyiriations payable -50 per cent by the District of Columbia. 








272 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


11. Act of Congress April 28, 1922, authorized commissioners to convey bed of 
Seaton Place and bed of S Street, east of Fourth Street NE., extending to the line of 
the Metropolitan branch of the Baltimore & Ohio Railroad Co. to the Sanitary Grocery 
Co. Although this property was never in Federal ownership and was dedicated to the 
District for public use in the subdivision of adjoining property for development pur¬ 
poses, and such property has never been improved, and therefore the United States has 
been placed at no expense in connection therewith, the sale price of $10,927.88 was 
required by the act to be deposited in the Treasury wholly to the credit of the r evenues 
of the United States. 

12. In the fiscal year 1921 the District of Columbia paid 60 per cent of appropriations 
and received only 50 per cent of miscellaneous items of revenues. The District is 
entitled to an additional 10 per cent of amount credited to the United States, or 
$49,930.53. 

13. Inability of the United States for the payment of one-half of the expenses of the 
District between 1874 and 1878, following out the reasoning of Judge Downey, Comp¬ 
troller General of the Treasury, in his decision regarding the responsibility of the 
United States for the payment of one-half of the interest and sinking fund on the 3.65 
bonds of the District. 

Statement shoving surplus or deficit in District of Columbia revenues on June 30 of the 
several fiscal years 1879-1916, inclusive, dejiciencies representing District's indebted¬ 
ness to the United States for respective fiscal years, and surpluses representing balance 
to credit of District in cash in Treasury, after meeting all advances for said year. 


Fiscal year. 

Revenues. 

Fiscal year. 

Revenues. 

Surplus. 

Deficit, bal¬ 
ance due 
United 
States. 

Surplus. 

Deficit, bal¬ 
ance due 
United 
States. 

1879... 

$257,618.47 
302,92:3. 45 
410,768.08 
446,411.73 
461, 580. 29 
515,764.16 
.505,963. 20 
685,652. 89 
978,349.15 
1,310,119. .39 

1,328,747. 78 
314,240. 81 
112,210.64 

.$.5,08^04' 

1898. 

$917,581.91 
603,255. 28 
387,577.18 


1880. 

1899. 

. 

1881. 

1900... 

1882. 

1901. 

$220,182. 57 
1,7.59,238.34 
1,653, .517. 51 
1,.349,661.69 
2,240,030. 14 
2,931,259.49 
3,277,866. 28 
3,650,563. 06 
3,992,515. 03 
3,274,278.98 
2,66.5,081.81 
1,779,061.16 
621,521.71 

1883. 

1902. 


1884. 

1903. 


1885. 

1904. 


1886. 

1905. 


1887. 

1906. 


1888. 

1907. 


1889. 

1908. 


1890. 

1909. 


1891. 

1910. 


1892. 

1911. 


1893. 

83,767.19 
625,207. 74 
429,090. 99 
845,3.3.5.93 
683,936. SO 

1912. 


1894. 

1913. 


1895. 

1914. 

75,875. 24 
7.31,786.74 
1,;380,218.90 

1896. 

1915. 


1897. 

1916. 

2,664,717. 77 




(1917 to 1922 printed in another report.) 

At 1 o’clock p. m. the subcommittee took a recess until 4.15 o’clock p. m. 


AFTERNOON SESSION. 

The committee met, pursuant to the taking of the recess, at 4.15 o’clock }). m.. 
Senator Lawrence C. Phipps (chairman) presiding. 


Statement of Senator Wesley L. Jones, of Washington. 


The Chairman. Senator Jones, it has been suggested that the committee would 
like to have your understanding as to the intent and purpose of that clause in the act 
of June 29, 1922, for the appointment of a joint select committee at the time it was 
recommended to the Senate by the managers of the conference on the part of the 
Senate, and agreed to in the conference. 

Senator Jones of Washington. Well, Mr. ('hairman, about the best way I can answer 
that is to say this, that I introduced a resolution, 1 think it was to provide for a special 
committee to examine the fiscal relations of the District of Columbia and the United 
tates, in view of the controversy that we had been having with reference to them. 















































































1 iscAi^ rp:lattoxs between it. s. and district of cotatmbia. 273 

and that resolution was in very general terms, and a copy of it ran be found It 

boS'a^hsino^th^^'''^f decollation now is-lhave nol 

looked at It since then hut my recollection now is-that it iirovided for the investi¬ 
gation ol these fiscal relations from 1878 on. nnesii 

The Ohairman. That is correct. 

Senator Jones onVaahington. In oonferrinsr witli ('ongressman Johnson in reference 
for 1 ; investigation ought to go Iiack to 1874, and stated his reasons 

n .ej^^^dessman Johnson also thought my resolution was too general in terms, and 

he submitted, or rather proposed, a draft of a resolution going a little bit more into 
detad, and it seemed to me that what he suggested was substantially embraced in 
the lesoliition that I had introduced, and different drafts went back and forth between 
us without any hnal or definite conclusion being reached upon any particular form 
\\ hen the conferees met in the Appropriations Committee, my recollection now is 
that when this matter came up Congressman Madden presented a tvpeuTitten draft 
of a proposal that he said the House Members were willing to agree to. They were 
not willing to agree to the proposal that we had in the resolution which I think had 
been hnally embodied in the District bill. 

The Chairman. It had been. 

Senator Jones of Washington. Upon its being read, my recollection now is that I 
expressed the view that it embraced substantially the proposition that was in my 
resolution, and that while I would prefer my resolution I thought that covered sub¬ 
stantially the same ground, and I was willing to accept it. My idea, as I said a moment 
ago, was and is that this provision here was nothing more than the resolution that I 
had introduced, except that it went a little bit more into detail, but that all these 
matters were embraced in the general terms of my resolution. 

The Chairman. Do you recall that it gave additional time over and above that 
provided in your resolution? 

Senator Jones of Washington. I do not remember. 

The Chairman. Did your resolution provide that the committee should report by 
January 1? 

Senator Jones of Washington. I do not rememlier that. 

The Chairman. Instead of February 1? 

Senator Jones of Washington. The resolution will speak for itself. I would like 
for the committee to get a copy of that resolution. 

The Chairman. Did you have in mind—— 

Senator Jones of Washington. My recollection now is that I did have set in it the 
time within which a report was to be had, because I know I thought that we ought 
to have the report so that we would have this controversy gotten rid of by the time 
we got up another appropriation bill. ' 

The Chairman. That is immaterial, because other witnesses have covered that 
point; but did you have in mind charging the joint select committee with the duty 
of inquiring into what expenditures had been made by the Federal Government alone, 
separate and apart from the District of Columbia appropriation bills, for the erection 
of statues and monuments, and for other things that tended to beautify the city, or 
in part at least to beautify the city? 

Senator Jones of Washington. Well, I do not think I had ever thought about that 
particular thing, but my idea was that this committee would ascertain and deter¬ 
mine—I have the resolution now and will read the exact language. [Reading:] 

‘‘That a joint committee of three Senators, to be appointed by the President of the 
Senate, and three Representatives, to be appointed by the Speaker of the House of 
Representatives, is hereby created and authorized and directed to ascertain and 
determine what, if any, indebtedness there may be owing to the United States from 
the District of Columbia or what, if any, indebtedness there may be owing to the Dis¬ 
trict of Columbia from the United States, growing out of transactions or relations 
existing between them since the passage of the organic act of 1878. The committee 
in reaching a conclusion shall consider not only legal but equitable claims and 
obligations”— 

In other words, my idea was that this committee would investigate every matter 
in controversy between the District and the United States and reach a decision as 
to what it thought was just, fair, and equitable upon not only legal claims but equi¬ 
table claims— 

“and shall report its conclusions and recommendations to each House of Congress 
on or before the first Monday in January, 1923.” 

I take it tliat this was my resolution, although this is in the House of Representa¬ 
tives, after it passed the Senate. 

Senator Harris. Mr. Cliairman, suppose you explain to Senator .lones why we 
want his statement. 



.274 FIS('AL R?:LATI()NS between U. S. and district of (X)LUMBiA. 


Tlie ('hairman. I might state, as concisely as I may, that tlie committee has heard 
from Messrs. Johnson and (Tamton, the two Congressmen who were on the conference 
committee, and they explained to the committee that their understanding is that it 
is the duty of this committee to inquire into all expenditures, whether made under 
the District of Columbia appropriation bills or otherwise, by the Federal Govern¬ 
ment alone, for all activities that would tend to beautify the city or to accomplish 
the other purposes enumerated there, and that it is the duty of this committee to 
present to the (’ongress a report on those items. 

Senator Harris, Such as the Lincoln Memorial and the Grant Monument. 

The Chairman. Congressman Cramton stated that while he felt it was the duty of 
this committeo—and the act clearly called for its performance—to report the cost of 
the Lincoln Memorial, he did not want to be understood as being in favor—as being 
willing to vote—that the District should be charged with half of that expenditure. 

Senator Jones of Washington. Well, 1 will say this, Mr. Chairman, that I never 
taxed my mind with trying to ascertain what should be considered and what should 
not. I have never been as (dosely connected or involved in these controversies as 
some of the others, but in my resolution I tried to frame, in general terms, a resolu¬ 
tion that would be broad enough to cover all legal and e luitable questions that could 
properly be considered. I must say that it never entered my mind that in regard 
to things like the Lincoln Memorial and these various statues around the District 
any possible claim could be made upon the District of Columbia for any expenditure 
in relation to them. That never entered my mind, T will say, either directly or 
indirectly. T never thought of such a thing. 

The Chairman. Is it your recollection that the House language as accepted by the 
Senate conferees in its final form was hrst brought to your attention at the meeting 
of the conference where the conferees did agree to accept and recommend? 

Senator Jones of Washington. As I said awhile ago. various propositions had gone 
back and forth between Congressman Johnson and myself, and he had suggested 
various language relative to the matter, but we had not reached any definite con¬ 
clusion and agreement between ourselves as to what the language should be, and I 
did not know that any suggestion would be made, even, by the House until it was 
presented at the conference. I think there was a great deal of the language in this 
proposition that was in the proposal of Congressman Johnson; but the language of 
the resolution and its provision as presented in full I can not say that that had been 
presented to me before. I do not think that it had. But. as I say, much of the 
language had been, I think, and was, embraced in the proposals that Congressman 
Johnson had submitted—tentative memorandums. 

The Chairman. You recollect at the time that there was another item of moment 
in dispute, and about the conclusion of the discussion relating to that item, before 
the Senate conferees would agree to accept it, the question was asked of Congressman 
Madden, “Well, what about the other item that is in dispute”? and that his response 
was, in effect, “We will have no trouble about that. We are practically in agree¬ 
ment^’; and that then, according to my recollection at least, we agreed on the other 
item that was in dispute, and then passed on to this item. 

Senator Jones of Washington. Probably if you would tell me what that other item 
was, it might refresh my memory in that particular. 

The Chairman. I am trying to recall. 

Senator Glass. Mr. Chairman, what had Mr. Madden to do in the matter? I do 
not recall that Mr. Madden was a conferee or had anything to say about it. 

The Chairman. Mr, Madden was appearing in place of Mr. Da^ds and Mr. Cramton 
was appearing in place of Mr. Evans. 

Senator Glass. I do not recall that conference. I was a member of the conference 
committee which, as I recall, agreed to this investigation of the surplus. 

Representative Evans. As to the matter suggested by the chairman, I do not 
remember. I read the record. As a matter of fact, I think this was the situation at 
the time I left. We had agreed upon a conference report satisfactory to both Senate 
and House conferees, but there was some Senator who objected to its consideration, 
and he was able to hold it up by reason of the rules of the Senate, which gave him a 
legislative advantage. You were recessing, I believe, from day to day on some bill. 

Then you had approached us near the end of the session, and he appeared to get 
something that satisfied him, and then the new matter to which the Senator refers was 
called up, and of which Senator Jones has just made mention. 

Senator Jones of Washington, Then, if you will remember, we had reached a 
tentative agreement on this matter of difference. It could not be embodied, how¬ 
ever, in the conference report, under your rules, so that we had to report a disagree¬ 
ment on behalf of that proposition; but the House conferees, after that report had 
been made and agreed to, then recommended that the House accept the proposal that 
the conferees had agreed to. and the House did accept that. 


J ISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF CXILUMBIA. 275 


It came ovei to the Senate for the purpose of agreeing to the Senate amendment 
^th an amendment, and then when it came up we amended it by incorporating these 
^ that is the different provisions that the Senate agreed to. 

Senator llarnson of Mississippi offered one proposal, and that was accepted; so that 
we got in two oi three propositions in the amendment that the House sent over as an 
amendment to the Senate amendment, and then that was sent to conference and the 
new conference committee on the part of the House was appointed. (Congressman 
Evans. I think, was away and Congressman Davis. T think, was sick, so that Congrevss- 
man Madden and, I think, Congressman Cramton and (bngressman Johnson were the 
final conferees on the bill in that situation. 

Xow, just the particular suggestion that the chairman makes here now I do not 
remember. I do have this impression, that after we had been in the conference a 
little while Congressman Madden indicated that he thought we probably could not 
reach an agreement with reference to this matter, but said that the House conferees 
desired to submit a proposal, and then submitted this proposal, and it was agreed to. 

The Chairman. Were we not in agreement as to accepting amendment Xo. 1? 

Senator Jones of Washington. I think so. 

The Chairman. Agreement Xo. 1 embraced the 60-40, the setting up of the so- 
called working fund and the division of receipts from privileges and rentals. 

Senator Jones of Washington. I think so. 

The Chairman. And the question arose, as I recall it, if wq acceded to the setting 
up of the working fund and the division of privileges and rentals, would we be getting 
anywhere, or were they going to refuse to come together on the determination of the 
surplus; in response to which query, as I recall it. Congressman Madden replied, 
saying that we were in practical agreement as to the investigation of the surplus. 
Of course, there is no record of the matter. 

Senator Jones of Washington. My recollection is rather different than the matter 
last remarked by you, Mr. Chairman. My impression is that Congressman Madden 
rather intimated that they would agree on the 60-40, and if we could agree on the other, 
that would probably be the best for us to take, and rather indicated that he thought 
we would not agree to their proposal: but he said “We will submit the proposal.” 
That is the sort of impression I have now, and I thought that we rather surprised them 
by accepting their proposal. 

Representative Hardy of Colorado. You really did no know what you were accept¬ 


ing? 

Senator Jones of Washington. Yes; it was read. We did not express our acceptance 
until it was read. My idea was that it was substantially the same as my resolution, 
it being in more detailed terms. 

The Chairman. Does your resolution at any time contemplate going back into 
accounts that have been audited, adjusted, and the District ordered to pay certain 
amounts, where the interest was waived by the (Congress, that those should be re¬ 
opened and this interest charged at the 3 per cent rate? 

Senator Jones of Washington. As I said before, 1 never thought about any ol these 
detail problems. I simply wanted to have the whole matter submitted to a joint 



willing, so far as I was concerned, to leave the whole matter without going into detail 
to the committee. I thought 1 was giving about the broadest possible authority to 

the committee. . ... . , 

The Chairman. The work of the committee which you have in mind you estimated 
could be accomplished in six months, then, from January 1 to July i? 

Senator Jones of Washington. I thought that this controversy ought to be settled 

bv the 1st of January. . 

‘Senator Ball. Senator Jones, is there any difference, in your judgment, between 

an equitable and a moral claim? ijj 

Senator Jones of Washington. 1 think that an equitable claim would be included 
in a moral claim, and I am not so sure—I do not think there would be any difference. 
Senator Harris. A moral claim certainly ought to be equitable. 

Senator Jones of Washington. Yes; I think so. 

Senator Harris. The House Members—the conferees-seemed to have a little 
different view point from what our conferees had, and we wanted to get your judgment. 

Representative Hardy of Colorado. The House conferees read us the words of the 
act and call our attention to what passed in the conference as showing what they 
had in their minds. It is pretty broad here, and they ye telling us the scope that they 
think we oiu-ht to cover. That is what brought about this discussion. The act 


With a view to ascertaining and reporting to Congress vvhat sums have bemi ex¬ 
pended by the United States lind by the District of Columbia, respeidively, whether 


276 F1S(L4L RELATIONS BETWEEN U. S. AND DTSTRKrr OF CK)LUMBJA. 


for the purpose of maintaining, upbuilding, or beautifying the said District or for the 
purpose of conducting its government or its governmental activities and agencies, or 
for the furnishing of conveniences, comforts, and necessities to the peo])le of said 
District.” 

Senator Jones of Washington. There is one idea, let me suggest. 1 do not care to 
argue it. I am willing to leave it with you gentlemen. I do not think that the build¬ 
ing of the Lincoln Memorial has anything to do wdth the fiscal relations between the 
District of (^olumbia and the United States; it was to erect a memorial to a great 
American. There is the qualification right in the language of that resolution, and that 
is an example of this. 

Senator Glass. The purpose was not to beautify the District of Columbia: it was to 
erect a memorial to a great Ameri(‘an. 

Senator Jones of Washington. Certainly; and that is true of tlie various statue*s in 
all parts of tlie city. They have nothing to do with the fiscal relations between the 
District of Columbia and the United States. And, as the Senator from Virginia says, 
they are simply memorials to different people. 

The Chairman. There were one or two that were taken down fiom their pedestals 
because the Commission of k^ine Arts thought that they were not serving to Vieautify 
the city, and were not as statues serving any good purpose. 

Senator Glass, do you care to make any statement as to your recollection of the 
adoption of this act? 

Statement of Senator Carter Glass, of Verginia. 

Senator Glass. I am afraid my recollection of it would not be very \alual)le to 
you gentlemen, because I have no recollection in the world of meeting in formal 
conference with Martin Madden, and I do not believe 1 ever did. 

The Chairman. It may be possible that you were not present at that conference, 
and that it was explained to you and that you agreed to sign. 

Senator Glass. Very likely. Well, inevitably it is so. T know that I never entered 
into any conference with Martin Madden, or I would recollect it. 

My recollection of the incident is that there was a very sharp di\ ision of opinion-i— 
difference in judgment—between the House conferees and some of the Senate con¬ 
ferees, as to this alleged surplus, and as to whether or not the alleged surplus, said to 
be some $5,000,000, should be put at the disposal of the District of (''olunibia and 
expended by the Commissioners of the District. I recall very distinctly that Repre¬ 
sentative Ben Johnson, and perhaps in more detail than 4Ir. Evans, pointed out that 
for a long series of years rentals and leases, and a good many it'^ms of a kindred descri]i- 
tion, had been collected and appropriated exclusively to the use of the District, 
and not applied in any measure to the 50-50 ])lan of expenditure, and their conten¬ 
tion seemed to be that if a thorough searching accounting of these items was had over 
a long series of years, no surplus, in fact, would probably be found to remain belong¬ 
ing to the District. 

I remember very distinctly that we had some discussion about the interest charge, 
the contention on one hand being that the mere fact that the Government of the 
United States had not made an interest charge on these preliminary advances was 
not a waiver in the truly legal sense, but merely an omission, and that the Government 
would have a right, over a series of years, to compute tliis interest and to have it 
applied on any division of expenses that might be made with reference to the surplus. 
That is all I recollect of the details. 

Phirther than that, we found we could not agree on the surplus, and therefore could 
not make a complete conference report if we were to persist in that discussion, and we 
agreed to refer it to this special committee composed of three Members of the Senate 
and three Members of the House. My general idea of the function of this committee 
was that it was to examine into all of these matters relating to a proper share of the 
expenses of the District to be borne by the District and the Government of the United 
States, respectively. I certainly had no idea on earth, and wdth all due respect to 
other people’s opinions, it seems to me perfectly absurd to talk about it, of charging 
in the expenses of the Lincoln Memorial to the District of Columbia. I never dreamed 
that items of that description were to enter into the investigation or the computation 
of an expense account. I interpreted the term “beautifying the city*’ in respect to 
the esthetic tastes of the permanent inhabitants of the District of Columbia, and not 
in erecting a great memorial to celebrate and perpetuate the achievements and fame 
of a great citizen of the Republic. That never once entered my mind. 

The Chairman. Senator Glass, take a different form of expenditure, such as that 
for the Potomac Park, where we are informed that the area now within the park is 
partly at least, if not largely, reclaimed land, that the Federal Government stood all 


FISCAL RELATIONS BETWEEN 


U. S. AND DTSTUICT OF COLUMBIA. 


277 


riliV’T] “>« >and liad been 

leclaimed, then tlie I^ederal Cioveriiment and tlie District joined in biiildinff the 

'roadways including tin? Speedway, and erecting^all of the other improvements that 
exist in the park. A point has been raised that this committee should go back and 
ascertain the cost of any work performed by the Federal Government in that activity 
after July and that this committee should report to Congress the amount of 

that expenditure for the work of reclamationi 

Senator Glass. I frankly say that while, like Senator Jones, I did not undertake to 
charge my imagination with what might be done in that regard, I certainly would not 
have suppose^d that the work of reclamation by the Government would be regarded 
as a part of the expenses of the District of Columbia in determining whether or not 
there was any surplip properly to the^credit of the District. The reclaimed land does 
not belong to the District of Columbia: it belongs to the Government of the United 
'StS-tGS. 


• Of course 1 agreed to this report, because my name is signed to it: but my recol¬ 
lection is that all of our discussion was had with Mr. Davis, as chairman, and Mr. Evans 
and Representative Johnson, and that we could not agree as to this surplus, and we 
agreed to refer the whole matter to this committee for investigation. 

Representative Wright. Taking the language of this jirovision that creates the 
joint select comrnittee, what would you consider to be the scope of the investigation 
whicJi the committtee ought to prosecute? You take, for instance, these words here: 

“For the purpose of maintaining, upbuilding, or beautifying the said District or 
for the purpose of conducting dts government or its governmental activities and 
agencies, or for the furnishing of conveniences, comforts, and necessities to the people 
of said District.” 


Senator Glass. Well, would you think that the people of the District of Columbia 
were materially interested or to be charged with the expense of erecting statues? 

Representative Wright. Not for one minute. I want to get your view. 

Senator Glass. Well, then, I do not think that this committee ought to inquire 
into anything of that sort. I think it means the legitimate, current expenditures 
for the improvement of the streets and parks, and the maintenance of the current 
business activities of the District government: the policing of the town, the tire protec¬ 
tion of the town, which includes the public buildings as well as the District buildings, 
and the things of a current business nature. It seems to me perfect folly to talk about 
charging the expenditure for the erection of memorials and statues to the District. 

The Chairman. Senator Glass, would you draw the line as between appropriations 
covered in the annual District of Columbia bills and separate bills such as those 
for public buildings and grounds, or appropriations that are under distinctly Federal 
bills that are charged entirely against Federal revenues? 

Senator Glass. Mr. Chairman, I confess that I was very much impressed by the 
argument of Mr. Evans that the District of Columbia over a long series of years had 
been collecting rents and fees for licenses, and various sums of money, which had 
not been put into the common fund, but which had been appropriated and applied 
exclusively to the use of the District of Columbia, and as they presented their reasons 
for refusing to agree to this surplus business I formed the notion that when an account 
of actual current expenses was cast u]) there would not be much surplus left: but 1 
certainly did not have the slightest notion in the world that such things as the Lincoln 
Memorial or a reclamation enterprise of the Government itself was comprehended 
in the resolution that we adopted. But, as has been said here, the committee of 
course will have to act on its own interjjretation of the law and not on the intent 
of the conferees, it seems to me. 

Representative Wright. What do you think it means, Senator, as passed? 

Senator Glass. Well, I do not think it means the Lincoln IMemorial, certainly. 

Representative Wright. I do not. either. 

Senator Glass. Or anything of a kindred nature. 1 do not think it means 
reclamation. 

Senator Ball. I think it means just as you have explained, personally: the streets 
and parks, and those things that have been improved by joint appropriations. 

Senator Glass. Yes, and things that have been beautified in connection with the 
maintenance of the parks. Oh, I think it is perfectly absurd, and 1 am astonished 
that anybody that has sense enough to be elected to Congress would talk about includ¬ 
ing the Lincoln Memorial in the current expense accounts. 

Senator Harris. The chairman stated. Senator Glass, that they did not say that 
thev wanted it included or wanted it charged against the District of Columbia, but 
they thought that under this law we should mention all items like that. 

Senator Glass. I do not think so. I do not think you ought to mention any item 
that is not to be apportioned as a part of the expense of the District and a part of the 


278 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


expense of the United States Government—^in other words, a divided expense. The 
Lincoln Memorial is not an expense of the District of Columbia; it is an expense of 
the Nation. You have just as much right to charge it to the State of Virginia as to* 
the District of Columbia. 

Representative Wright. You think that the water system, and its maintenance, 
and the hospitals, and things of that kind, ought to be tak6n account of? 

Senator Glass. I do, undoubtedly; the fire department and the police department. 

The Chairman. There is a roll call of the House and a quorum call in the Senate.. 
Senator, have you concluded all that you want to say? 

Senator Glass. I did not desire to say that. I had enough of the controversy 
that we had in the conference committee. 

The (Chairman. Will you answer one question for Mr. Evans before you go? 

Senator Glass. Yes, certainly. 

Representative Evans. You have recalled to my mind what 1 think is the fact 
with reference to the conference in which you and I, Senator, participated. The- 
question of the surplus we could not agree upon. The Senate conferees suggested 
an amount, and the House conferees said they did not want to agree to that amount.. 

Senator Glass. Yes. 

Representative Evans. And then I think it was myself that suggested the differ¬ 
ence, whatever it was, covering this long series of transactions, we ought to eliminate 
from our appropriation bill, and go on with the other part which we had agreed upon; 
and that this matter of the appointment of this committee came up at a conference 
at which I, at least, was not present, and at which you perhaps were not present,, 
when Mr. Madden and Mr. ('ramton were present. Is not that the fact as nearly as 
you can recall? 

Senator Glass. That may be the case. 1 know that we agreed that we could not 
agree on the surplus, and while I wanted to be loyal to my Senate associates, I was 
very much impressed by what the House conferees said as to whether there was- 
really a surplus or not. 

(Thereupon, at 4.45 o’clock p. m., the committee adjourned until to-morrow,. 
Wednesday, January .31, 1923, at 10 o’clock a. m.) 


FISCAL RELATIONS BETWEEN THE UNITED STATES AND' 

THE DISTRICT OF COLUMBIA. 


Friday, February 2, 1923. 

The joint select committee met at 4 o’clock p. m., Senator Lawrence C. Phipps 
presiding. 

Present; Senators Phipps (chairman) and Ball, and Representatives Evans, Hardy 
of Colorado, and Wright. 

Present also, Mr. B. F. Hill, representing Haskins & Sells, public accountants. 

Statement of Mr. B. F. hill (Resumed). 

Representative Hardy of Colorado. There is one thing I want to get clear in my 
mind, and that is the matter of the 3.65 bonds. 

Mr. Hill. As I understand the whole proposition, the $281,500 was advanced by 
the United States to take up some of the old funded debt. Subsequently this bond 
issue of $1,200,000 was authorized by Congress. Of that amount $1,092,300 were 
issued, and then $281,500 worth of the proceeds from that $1,092,300 issued was used 
to reimburse the United States. That is the bond issue that says the United States 
is not to be held liable for any portion of that principal or interest. 

Now, if it is determined that the acts of Congress subsequent to the act providing 
for the issue of those bonds make the United States liable and the remaining portion 
of this $1,092,300 was also used to take up the old funded debt, then the amount does 
not enter into any consideration that I can see. 

Representative Hardy of (’olorado. The United States has put in some $282,000? 

Mr. Hill. That is as far as we want to talk about it, with this $1,092,300 of bonds 
outstanding, the Government then advanced this $281,500, so that when bonds were 
issued under this new authority of Congress they took $281,500 of the proceeds of 
the bond issue and paid the Government back. So that if the Government is liable 
in the first instance on the old funded debt and is going to be held liable notwith¬ 
standing the act itself, then I do not consider that the committee should consider 
the $281,500. 

I have called attention to the item of $281,500 in the report, and that the Comp¬ 
troller General handed down an opinion or decision to the effect that the acts of Con¬ 
gress appropriating for the purposes of the sinking fund and interest determined the 
question, and that the Congress had of itself assumed the liability for one-half of that 
issue of bonds and the interest on the same. 

Representative Hardy of Colorado. What view has been expressed on that in the 
House? ^ 

Representative Evans. 1 do not know that that has been considered in the House. 

The Chairman. It was considered last week. 

Representative Evans. We talked about it here last week. When Mr. Johnson 
was here I do not know that he gave his opinion. But it has never lieen considered 
in the House. 

The Chairman. He did give his opinion, and that was to the effect that in his 
judgment it was not necessary to reopen the question of the $1,092,300 of lionds. You 
will find that in the hearing. 

Representative Evans. I did not notice him saying that. 

The Chairman. Oh, yes. 

Representative Evans. There is, of course, nothing to reopen it for. It is only for 
the accountants to determine the amounts. The amounts were thoroughly audited, 
and the balance cast, I think, by Mayes, but at any rate the amounts have never 
been in dispute. The question, as I understood Mr. Johnson to express an opinion, 
referred to the matter of interest, when it was said that an act of Congress had appro¬ 
priated money from the sinking fund, and then the appropriation bill, I think, with 
reference to that one, said “appropriate so much, in full.” Now, the question that 
I understood was put to Mr. Johnson with reference to that was, did not the expression 
“in full-’ in the appropriation bill become conclusive, and he said he did not think 
it did; or perhaps did not put it in just that form, but said that one act of Congress 
could repeal another. That is where I understood it was called to his attention. As 
to the amount, there was never any question as to that. 


279 



280 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


The Chairman. The amount was reported in the Mayes report. 

Representative Evans. I think that is correct. 

The Chairman. And Congress made no charge against the District for interest. 

Representative Evans. It made no charge for interest under that item. 

The Chairman. Yes. 

Representative Evans. As to the otlier portion of it, the half-and-half had been 
determined; but I do not think there was anything said by Congress on the payment 
or the right of payment. I think it is just silent on that. 

Representative Wright. On the question of the bonds, I was especially anxious 
to hear from Congressman Johnson on the interest question. 

(The chairman here read from the testimony of Congressman Johnson before this 
committee, as follows:) 

“Representative Wright. I should like to hear from Congressman Johnson about 
the bonds. 

“Representative Evans. Do you mean the Georgetown bonds or the Washington 
bonds? 

“Representative Wright. Both. 

“Representative Johnson of Kentucky. My incpiiry and investigation into the 
District of Columbia matters through the 14 years that I was on the District of Columbia 
Committee, went very particularly into the 3.65 bond issue, and only incidentally or 
collaterally into the bond issue to which you have just referred. I may be mistaken 
about it, but I have the general impression that when the three municipalities here, 
the city of Georgetown, the city of Washington, and the remainder of the District of 
Columbia called the I^evy Court, or the County of Washington, were put into one, the 
one municipality of the District of ('olumbia, there was carried over a sinking fund 
from the old city of Washington into the municipality of the District of Columbia, 
and that that sinking fund soon became confounded Avith the sinking fund created for 
the purpose of retiring the 3.65 bonds, the retirement of which will be completed 
next year. 

“Representative Evans. Just there, Mr. Johnson: Do you mean it was confounded 
in the books of the Federal Treasury, or do you mean that it was confounded by the 
actions of both Federal Treasury and District authorities? 

“ Representative Johnson of Kentucky. Without being emphatic—because as 1 
said, I have not gone into it in great detail—I have the impression that the old sink¬ 
ing fund, which was bankrupt, went over into another sinking fund, that for the 3.65 
bonds, and was confounded by the District authorities, by paying items out of the 
sinking fund created for the retirement of the 3.65 bonds, without authority, and that 
the Treasury Department seems never to have caught it, but it just ran along until this 
final reckoning comes. 

“ Representative Wright. You think the District is responsible for the amount 
the Government paid in the retirement of those bonds? 

“Representative Johnson of Kentucky. I do not think that it should be under¬ 
taken by the report of this committee to make the District of Columbia chargeable with 
the half paid by the United States since the 1st of July, 1878. I did differ, and I con¬ 
tinue to differ, with the then comptroller, who decided that the United States was not 
liable for any part of the 3.65 bonds from 1874 until 1878 when the half-and-half law was 
enacted. But I have acquiesced in his opinion to the effect that if Congress appro¬ 
priated each year for the creation of that sinking fund, it should just as well be let 
alone and let go at that, although the comptroller in his opinion says that originally 
the United States was nothing except a guarantor of the 3.65 bonds. He made that 
quite plain and quite clear, that the United States was not the payee of those bonds 
to any extent, but that the United States was simply a guarantor of them; that the 
United States pledged its faith to see that a sufficient tax was levied to pay those bonds. 
The United States never did see that a tax was ever levied to pay those bonds; but 
instead, after July 1, 1878, half of the money that went toward the retirement of the 
bonds was paid out of the revenues of the District of Columbia and the other half 
out of the Treasury of the United States. 

“Under the language of the act under which this committee is sitting I think that 
this committee has the authority to go back and ascertain if it be a fact, and then re¬ 
port if it so proves to be, that the United States w,as only a guarantor.’’ 

The Chairman. What do you think about it, Mr. Evans? 

Representative Evans. I think that the declaration of Congress when it said it 
was not to pay those other bonds is on exactly the same score—no; it is stronger, 
considerably stronger, than this statement you use with reference to the bonus which 
was paid exclusively by the United States. The United States had made by its 
Congress a statement that this bonus would be divided 60-40, or 50-50, and it had 
paid that bonus. Now, with reference to those bonds, it did make a positive decla- 


i JSC’AL RELATIONS BETWEEN IT. S. AND DISTRICT OF COLOMBIA, 281 


ration that it is not to be bound. When it comes to the Georgetov;n bonds, the other 
set Oi bonds, the situation is slightly different. 

The ('hairman W hen you speak of Georgetown bonds, do von mean the $281,500, 
or do you mean the $1,092,300? . ’ ’ 

Representative Evans. No; I do not mean the $1,092,300. 1 am coming to the 

original liability, and I have been unable to find it. It is in some paper of mine that 
has been mislaid. 1 here were some bonds that were issued by Goergetown—of course 
under authority given by Congress—but there was no provision in the authority under 
which they were issued as to who should pay them, except that was to be implied 
from the fact that the State gives to the county authority to issue bonds. Of course, 
it means that the county is liable. It does not mean that the State assumes any 
liability at all, even though it registers those bonds. 

Now, both the old city of Washington and the city of Georgetown were in debt, 
but there was a portion of the debt that was gathered up and put into what was known 
as the 3.65 bonds, and as to the United States guaranty, that is what Mr. Johnson is 
having his dissertation about, the difference between him and the comptroller. It 
was with reference to the 3.65 bonds. 

The Chairman. Now, if you will allow me to continue the reading, the reading was 
concluded to a certain point in this discussion, and Mr. Johnson then continued as 
follows: 

“But I doubt the wisdom of going into that, since everybody has acquiesced and 
since Judge Downey as comptroller decided that the United “^States was obligated 
from year to year by the 50-50 act. 

“Representative Hardy of Colorado. And they have been paid off 50-50? 

“Representative Johnson of Kentucky. Yes. But the money that went into the 
sinking fund under the 50-50 jilan has been used not only, if I am correctly advised, 
for the retirement of the 3.65 bonds, but for other purposes. 

“The Chairman. That was under the $1,200,000 to which I called your attention? 

“Representative Johnson of Kentucky. Yes. 

“The Chairman. And there was a ruling of the Comptroller General as to that? 

“Representative Johnson of Kentucky, Yes. Now, there is another most serious 
thing connected with the retirement of the 3.65 bonds. The act of Congress is as plain 
as the English language can make it that no one of those bonds is ever to be retired 
at exceeding par.” 

Then we went on with the discussion as to the payment of premium. That was 
continued at some length. 

Now, to make this $281,000 clear: To begin with, the District borrowed from the 
United States $281,500 to pay off its obligation. 

Later, Congress authorized the District to issue up to and not exceeding $1,200,000 
at 5 per cent. 

The District issued those bonds to the extent of $1,092,300, sold them at a premium 
of $8,000, and put that money to its credit in the Federal Treasury, and out of that 
paid the previous obligation of $281,500. 

Representative Evans. And extinguished that liability. 

The Chairman. And extinguished that liability. There is no question in my mind 
about it; under the authorization for the bond issue the District assumed a liability of 
$1,092,300 and interest, under express stipulation with the Federal Government 
that the Federal Government was not liable for either principal or interest. 

Representative Evans. Now I think you use wrong words. You say “the District 
assumed.” The District did not assume at all. The District owed and issued its 
obligations. 

The Chairman. All right; it is the direct obligation of the District. Under that 
act of authorization the Federal Government had no liability. 

Now, as these bonds began to mature it was necessary, under the sinking fund pro¬ 
vision, to set up a sinking fund, and I think undoubtedly Representative Johnson is 
correct in his belief that the sinking fund’s manager, whoever he was, who had to 
handle these things, estimated in annual bills, so much for sinking-fund purposes, 
including this $1,092,300 of bonds, with the $15,000,000 of the 3.65 bonds, and enough 
was appropriated 50—50 by the District and the Federal CTO\ernment lo meet the 
sinking-fund requirements, whereas he should have carried $1,092,<100 in an entirely 

separate sinking fund. , « i 

Representative Evans. There never was a sinking fund created for those. 

The Chairman. Of course I can not say, but the evidence is that the two were com¬ 
bined instead of being kept separate. . , , • 1 

Representative Evans. What I mean to say is that theie neAei was congressional 
action which authorized putting the two together, except the putting together of 


puttim 

32894—S. Doc. 301, 67-4-19 



282 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


the two appropriations in the creation of the sinking fund, or the paying of the $1,092,- 
300 out of the general sinking fund. 

The Chairman. Now, I called Congressman Johnson’s attention to the fact that the 
comptroller had made a ruling on this, that the Government should pay one-half; 
and furthei’, that the $545,000, or whatever it was, was set up under the Mayes audit 
to be considered by the Congress as an obligation of the District, being the amount that 
the Federal Government had paid as its one-half, plus interest. The $281,500 dis¬ 
appears in the transaction. 

Representath'e Hardy of Colorado. Now, are we justified in recommending that 
we do not charge the District with any portion of that $1,092,300? 

The Chairman. The District has paid its half of the $1,092,300. 

Representative Hardy of Colorado. And the District should have paid it all. 

The Chairman. The District should have paid it all. 

RepresentatiAT Hardy of Colorado. In consideration of this one-half of the liond 
issue, any appropriations that were made for the payment of interest during the life 
of the bonds should also be considered, if you are going to consider any of it. 

The Chairman. Here is this set-up in our report on page 14, under title 4. 

(The chairman here read from the draft of the report.) 

Representative Ea'ans. If the $345,000 is to be charged the interest would have to 
be charged, and the interest would be more than the principal sum. 

The Chairman. And this is the same item presented in the IMayes report and the 
one covered by the Comptroller General’s opinion. Gf the two bond issues, so far as I 
have been able to learn, the 3.65 and these 5 per cents Avere the only permanent, we 
will say, or really funding bonds, that Avere issued before the formation of the District 
in 1878. They temporarily carried through there, and finally they AA'ere extinguished 
by the 3.65 bonds, and then by this one. 

Mr. Hill. There Avere three issues. 

The Chairman. What was the other one? 

Mr. Hill. The other one w’as 3.50. 

The Chairman. Do you recall the amount of them? 

RepresentatiA’e Harda' of Colorado. Is there any great contention on the part of 
Members of Congress that this $500,000 ought to be paid by the District? 

RepresentatHe Ea’ans. I do not know. I haA^e neA'er talked Aidth any person about 
that, except I think Mr. Madden, Mr. Johnson, Mr. Cramton, and perhaps I mentioned 
it to Mr. Mayes. 

Representative Harda" of Colorado. What do those people think about it? 

Representath'e Evans. I just talked about it. Yes; I mentioned it also to Mr. 
Dickinson. ’ 

Mr. Hill. There Avas an act approved ]\Iarch 3, 1891, proA'iding foi- the issue of 10-year 
funding 3.5 per cent bonds to the extent of .$2,800,000. The act itself did not stipulate 
any maximum amount, but there AA^as $2,800,000 issued, so that in addition to the 5 
per cents, that one bond issue AA'as issued, 

RepresentatHe Wright. It AA-as not clear to my mind on that point. 

The Chairman. In addition to the items set up here, you haA’e the reasons for not 
recommending its reopening. 

RepresentatWe Ea'ans. Mr. Chairman, I notice you mention part 2 of the report. 
Is that prepared? 

The Chairman. It is in preparation. The idea AA'as this: unless we dHided it into 
two parts, it AA'ould be a practical impossibility for anyone to read it. No one Avould 
read it. 

RepresentatiA'e Evans. I think you are wise. I am not criticizing. 

The Chairman. We set up in part 1 all of the information which Ave think pertinent, 
or ra consideration that would determine as the liasis of a settlement. Then Ave set 
up in part 2 the detailed information; the interest calculations of one or two items that 
were called to our attention by Mr. vSjialding, AA’hich I think the committee probalily 
agrees should not be charged. One of them Avas prior to 1878, groAving out of the 
collection of a judgment that was made subsequently; and there Avas that school house 
item of $6,000 that Avas called to our attention by Mr. Hodgson; and then there was the 
item that Mr. EA'ans called attention to. 

Noav, Mr. Hill, I aaTsIi a'ou would read for the committee Avhat Amu found on that 
item called to our attention by Congressman Evans. 

Mr. Hill. That is in regard to the tax of one-half cent per passenger? 

Representati Am Evans. I think that is it. 

Mr. Hill. According to a letter AATitten by the auditor of the District there had 
accrued, unpaid at December 31. 1920, $77,007.76; and for the calendar year $29,- 
386.05; and for six months ended June 30, 1923. $9,323.76. 

All of that, hoAAmA'er, AA'as not collected up to and including June 30, 1922. 


i'lSCAL RELATIOIs"S BETWEEN U. S. AND DISTRICT OF COLUMBIA. 283 


However, of that amount that was collected, the District received $40,404.66, and 
the L nited States received $36,603.10; and had that been apportioned on the basis of 
the percentage and appropriation for the years applicable rather than when it was 
collected, the District would have received $38,503.88, and the United States the 
^me, which would make a difference of $1,900.78 apparent loss to the United States. 
But we W'ould have to consider the six months’ period from July 1, 1920, to December 
31, 1920, wdiich would go on a basis of 60 per cent. Those figures are not available, 
and apparently the railway company in reporting to the District reports on a calendar- 
year basis, according to their own accounting, so that the portion which is applicable 
to the last six months of the calendar year 1920 would further reduce this $1,900.78, 
and would probably reduce it to such an amount that this committee probably would 
not care to deal with it. Is that sufficient, Mr. Chairman? 

The Chairman. It is for me, unless the committee feel that we ought to pursue 
that further. 

Mr. Hill. The only way you could do would be to average it, by half of the calendar 
year, as applicable to the last six months’ collection. Unfortunately, the auditor’s 
letter does not state for what period the whole $77,000 is. Had he given that informa¬ 
tion, then I could readily have dhuded it up; but apparently he must include about 
three years or more. 

Representative Hardy of Colorado. What is this for? 

Mr. Hill. It is for the one-half cent per passenger carried across the highway bridge, 
taxed against the Washington Bridge Railway Co. 

Representative Hardy of Colorado. Did the District participate in the building of 
that bridge? 


I would 


Mr. Hill. I am not in position to say. 

Representative Evans. I do not know. That could be considered; but I do not 
think that the Federal Government ought to ask for more than its share after they 
made this contract, under the circumstances. That is my idea about it. They were 
keeping it up, I think, on the 50-50 basis at the time. I do not know that very much 
was there, but whatever there was was going at the 50-50 rate. You would get into 
too complicated a condition of accounts if you went back to it. You will see in this 
bill that was passed last year as to real estate, etc. 

The Chairman. I know for about two or three years they were asking for $5,000 
extra maintenance in order that they might paint it liefore they finally gave it to us. 
That was on the 50-50 or the 60-40 basis. 

Is it the opinion of the committee that any charge should be set up under that item? 

Representative Hardy of Colorado. I would be willing to forget it. 

Representative Wright. It seems that it is not possible to trace it. 

The Chairman. You can not trace it accurately, in any event. 

Representative Evans. There would not be any trouble about tracing it, but it 
would cost more than it is worth. 

The Chairman. Do you want to move to omit the item? 

Representative Wright. I do not know that any motion is necessary, 
move to simply drop that item. 

The Chairman. Now, what about the $6,000 item—sale of school land? 

Mr. Hill. That is the single one that I have not gotten anything on. 

The Chairman. Mr. Hodgson can not locate that, can he? 

Mr. Hill. Evidently not. He has talked about it, but has not presented anything 
on it. 

Representative Wright. He says a school house was sold for $6,000 and the whole 
amount was credited to the District. That was apparently a long time ago, 

Mr. Hill. Mr. Spalding, I think, was the one that brought up a question of the ex¬ 
penditure of $25,000 for maintenance and repair of the Aqueduct Bridge. The Digest 
of Appropriations, 1917, folio 275, section 7, reads as follows: 

“That the sum of $25,000, or so much thereof as may be necessary, is hereby appro¬ 
priated, out of any moneys in the Treasury of the United States not otherwise appro¬ 
priated, for the purpose of maintaining and repairing the present Aqueduct Bridge 
until the new bridge herein provided for is completed.” 

That was interpreted by everyone as meaning that the United States was exempting 
the District from any charge under that $25,000, and so carried through the records. 

The Chairman. What was the appropriation made at the same time for the con- 
stmction? 

Mr. Hill. Reference was made also to the sundry civil act, July 1,1916, appropriating 
$250,000 for the new bridge, to be divided on the 50-50 basis. 

The Chairman. How did that last read? 

Mr. Hill. It refers to the sundry civil act of July 1, 1916, and then appropriates 

$250,000 for the new bridge. 

The Chairman. Both items are included in the same bill? 


284 FlSCxVL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Mr. Hill. On the same sheet in the Digest of Appropriations. 

The Chairman. And the one directed the District to pay half and the $25,000 item 
to keep that bridge in repair until the new one was readv? 

Mr. Hill. Y es. 

Representative Evans. A'ou say that the two appropriations were on the same 
bill? Are you accurate in that? 

Mr. Hill. In this Digest of Appropriations that I got the information from, it is on 
folio 275, section 7, of the Digest of 1917, and follows right after the $25,000 item. 

The Chairman. You have not got the appropriation bills there? 

Mr. Hill. Not except this reference that I gave you. 

The Chairman. You have not the number of the particular appropriation bill 
that carried these items? 

Mr. Hill. No, sir; I have not. 

The Chairman. I think we had better look up those appropriation bills and find 
out whether the two items were covered in the same bill or not. If they were, it 
would seem rather conclusive that the committee knew what it meant to do, but if 
they were in separate bills, then it might be proper to assume that the committee 
handling it and it not being the District bill but a sundry cicdl bill, that they put it 
in—just overlooked it. 

Representative Wright. Something was said here about a judgment against a 
railway company. 

The Chairman. That is the next one. 

Mr. Hill. The information regarding it was taken from the annual report of the 
Commissioners of the District of Columbia of 1896, page 96. 

In the old case of the District of Columbia v. The Metropolitan Railway Company, to 
recover $161,000 for paving its tracks and for 2 feet beyond the outer rails thereof 
from 1871 to 1875, which was transferred to the court of appeals by special act of 
Congress, judgment was entered for $34,136.12, with interest from May 27, 1880, 
besides costs. 

The court allowed for paving the railway company’s tracks between Seventeenth 
Street and the Capitol, and held that it was exempt on other parts of its lines. The 
amount of the judgment, $65,740.47, has been paid to the collector of taxes and the 
case closed. 

I took up this matter with Mr. Hodgson. I found that the amount had been credited 
to the general fund of the District, but his impression is that he had the matter up 
\vith the Mayes at the time that they were preparing their report and his impression 
now is that they decided not to comment upon it. 

Senator Ball. What was the date of this? 

Mr. Hill. This is 1916, when the judgment was secured. It referred back to 
paving between 1871 and 1875. 

Senator Ball. Paving done between 1871 and 1875 would be before the Govern¬ 
ment had taken over all those duties. It was in 1874 that the Government practi¬ 
cally assumed all of them. 

The Chairman. That is in the same category with other uncollected assets of 
the District that are outstanding on July 1, 1878. 

Representative Wright. How much is the amount due? 

Mr. Hill. $65,740.47, including interest. 

Senator Ball. You do not know whether that is included in the amount of 
$1,600,000 which was due the District in uncollected taxes, etc.? 

Mr. Hill. No, sir. 

Senator Ball. It may have been? 

Mr. Hill. No, sir; these were real taxes. 

Senator Ball. This judgment was settled in 1916; but it occurred between 1871 
and 1875. 

Representative Evans. Senator, would not the one be included as an assessment 
and the other as a tax, and so distinguished? They would call them reimbursable, 
probably. 

The Chairman. That was reimbursable. It was reimbursable prior to 1878. 

Representative Hardy of Colorado. Most of it was prior to 1874. It runs back 
to 1871. 

Representative Wright. Everything then on hand was turned over to the 
District. 

Senator Ball. I do not think it ought to be considered at all. 

Representative Wright. It was what is known as a chose in action. 

Senator Ball. I would not mention it. 

Representative Wright. This was credited to the general fund. 




nSCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 285 


TheCHAiRMAN Yes; the District got the full amount, as it was credited If 

-anyone desires to have it commented upon in this report, there is no objection 
of connection, I notice reference made to a part 2 

‘by that l^nfuage? 

Congi-ess here, we are called upon 
amounts that have been expended by the Federal Government and^he 
istiict, by yeais as tar as possible, and the total taken from the Mayes report M'e 

Representative Wright. Yes. 

TheCHAiRMAN. But the purpose is to show the total expenditures in as much 
detail as M'e can, over the entire period of years, and how the sums were contributed 

^^'HIGHT. It occurred to me that that would be a good large under- 

The Chairman. What is your opinion now with reference to that item. Do vou 
\vant to make reference to it in the report? 

Representative W right. I do not know that we do. It would be a rather exhaustive 
report. 


feenatoi Ball. I am in favor of making reference to it; that we recognize it as a 
receipt growing out of the operations prior to 1878. 

^ Representative WYight. That would be a very easy way to dispose of it; say that 
it one of those assets previous to 1874 that the Government assumed. 

The Chairman. Yes; we might make reference to it in the report. 

Senator Ball. W ill you read oft just wdiat Spalding referred to? 

The Chairman. The first item was, whether there was legislative authority for the 
manner in which the drawback certificates were treated. The accountants went into 
that very thoroughly. 

Item 2 was, whether the receipt of the $(>5,740.47 should have been credited one-half 
to the United States and one-half to the District of Columbia. That is the one we have 
talked about just now. 

The third item is whether the United States or the District of Columbia, or both, 
have borne the expense of the criminal insane, residents of the District of Columbia, in 
the Government IIos]utal for the Insane. 

Representative W’right. That has been covered. 

Representative Evans. Before you ])ass from that, Mr. Chairman, if you please, does 
anyone know whether there is a different condition with reference to criminal insane 
-and ordinary or noncriminal insane? I do not. My understanding is that all coming 
from the District of ('olumbia are ]uit into St. Elizabeths Hospital, and that it is 
covered under the District of Columbia appropriation bill: and that it was 50-50, and 
now it is 00-40. 

Senator Ball. They are not sent there for a long time, though. They are sent 
'down to Atlanta. 

The Chairman. We are appropriating $850,000 for them this year. 

Representative Evans. The Senator is speaking about one thing and the chairman 
.about another. Senator Ball, means that the criminal insane are not sent to St. 
Elizabeths for more than a short period and they are then sent to Atlanta. 

The Chairman. AYs; that is correct. 

Representative Wright. My understanding is that all the insane of the District 
are sent there, whether they are criminal insane or not; and then, on the other hand, 
the Government sends a great many sailors and soldiers there. 

Senator Ball. They send them to St. Elizabeths Hospital from California. 

The Chairman. This next item, A’o. 4, is the one we have been talking about, 
$25,000 for the maintenance of the old bridge until a new bridge could be completed, 
;and that I would like to have a reference to. 

Mr. Hill. I have it marked so that I could look it up. 

The Chairman. The fifth item is whether the District of Columbia should bear 
one-half of the District of ('olumbia (Jourt of Appeals Building. What about that 
item? 

Mr. Hill. That was more in the way of a question that was propounded to the 
'Committee, rather than to be answered from an accounting standpoint. 

Representative Wright. Do you know the facts about it? 


Mr. Hill. No. 

Representative Evans. 1 do not even know whether the Federal Government 
paid all or not. What does Mr. Spalding say, there? 

The Chairman. He does not say anything. There is here just a question whether 
the District of Columbia should bWr one-half the Court of Appeals Building. 


286 FISCAL RELATIONS BETWEEN U. S. AND DISTRICT OF COLUMBIA. 


Representative Wright. The statement would imply that the United States 
built it. 

The Chairman. Yes; it would imply that. I do not know whether that was in¬ 
cluded at the time the present courthouse building was reconstructed or not. 1 think 
we had better find out at once who paid for that building. 

Representative Wright. And just what it is used for. 

Representative Evans. It is the Court of Appeals building. The Court of Appeals 
is the reviewdng court on all cases going from the District court to the United States 
Supreme Court, cases arising in the District of Columbia. 

The Chairman. At present it is being used for the pur])oses of cases appealed that 
did not arise in the District of Columbia, as stated by Mr. Ualloway. 

Representative Wright. I understand it is a court of appeals. 

Representative Evans. The court has other functions, one of them being that of a 
court of original jurisdiction in all patent cases. 

The Chairman. That is one of the principal things that is dealt with in the court 
of appeals building. 

Representative Wright. It can be called a court of appeals building, and yet it 
can be put to divers other uses that are not comprehended under the title of a court 
of appeals. 

Representative Evans. Things will occur in the District of Columbia courts that 
will occur, I presume, in no other Federal court. All actions that are taken by being 
directed at a secretary or some subordinate officer of the Government are tried here 
necessarily because the jurisdiotion is here. In rare instances only would you get 
such a case outside. 

For instance, suppose I want to try the legal question as to the Secretary of the 
Interior’s declaration as to heirs in a given case. I do that in the District of Columbia, 
because I get personal service here on the officer. 

The Chairman. The only other item in the Spalding exhibit was whether the 
items appearing in the '‘dirt book” should have been treated as repayments to appro - 
priations rather than as revenues of the District of Columbia. MTien we discussed 
that with the auditors, Ave found there was nothing in it. 

Representative Wright. It was a rather a “trashy” matter. 

The Chairman. Yes: it did not amount to anything. 

Gentlemen of the committee, we are proceeding AAdthout Senator Harris, but I 
would like to have an understanding here, if we can, as to what shall be done with 
this outline of the report that has been submitted; I mean, whether to discuss it if it is 
desired to, and get any suggestions that can be made now, because our time is very 
short, and we do not want to ask for additional time if we can avoid it. 

Representative Evans. You are looking at me, Mr. Chairman. If you want to know 
my opinion, I haA^e not changed my opinion from the other day about that. 

And, AAdth reference to what should be in the report, I have not changed my opinion 
from what I said last time we met. 

There are conclusions in this draft of the report, or statement of facts, which are part 
facts and part conclusions, that from your point of view are accurate, but from mine 
are inaccurate. Now, I will be specific by way of illustrating. It is stated in sub¬ 
stance, that you thoroughly inA'estigated this matter all the way through. My opinion 
as to Avhat ought to be the statement is just what I said the other day. We investigated 
back to 1911, and nothing prior to that, unless as a part of our investigation of items 
subsequent to that we were led back there, or our attention was specifically directed 
to something back there. 

The Chairman. A very careful effort has been made to disclose that fact, and tO’ 
make it clear in this report. If it is not so stated, and it is pointed out by any member 
of the committee wherein the report is not definite enough upon those features, cer¬ 
tainly we want to correct it, because we all know what we did. We haA^e gone as far 
. as Ave could in the inA'estigation as we see it. 

RepresentatiA^e Ea’ans. I think you hax’e gone as far as you could Avith the time you 
have got. 

The Chairaian. Yes. 

RepresentatiA’e Wright. I want to say that I think there are not less than six state¬ 
ments that we did not go back of 1911. I think it is referred to in the report at least 
fiA'e or six times. 

The Chairman. It is 6 o’clock and Ave aahII take an adjournment until to-morrow. 

I Thereupon, at 6 o’clock p. m., the committee adjourned until Saturday, February 3^ 
1923, at 10 o’clock a. m. i After an executiA'e session the committee adjourned sub¬ 
ject to the call of the chairman. 


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